Does Tesla Still Qualify for the EV Tax Credit?

No — Tesla vehicles no longer qualify for the federal EV tax credit on new purchases. The One Big Beautiful Bill, signed on July 4, 2025, ended the $7,500 clean vehicle credit under Section 30D for any vehicle acquired after September 30, 2025.¹ If you ordered a Tesla before that date and met specific contract requirements, you may still be able to claim the credit even if delivery came later. If you’re buying now, the federal government offers no credit against the purchase price.

What Ended and When

The Inflation Reduction Act’s Section 30D credit gave qualifying buyers up to $7,500 toward a new EV. The One Big Beautiful Bill accelerated its termination along with two related programs: the Section 25E used clean vehicle credit and the Section 45W commercial clean vehicle credit that leasing companies used to pass savings through to lessees.² All three ended for vehicles acquired after September 30, 2025.³ The elimination reaches leases too, because the commercial credit was the mechanism behind most lease-based EV discounts.

The Transition Rule for Pre-October Orders

You can still claim the $7,500 credit for a Tesla delivered after September 30, 2025, if you did two things on or before that date:

Entered into a binding written contract to buy the vehicle, and
Made a payment — which can be a nominal down payment or a vehicle trade-in.¹

The credit becomes available when you take possession. If you already received the credit at the point of sale through a dealer transfer before the deadline, the law does not claw it back, but you still have reporting to do at tax time.

Which Tesla Models Qualified

For anyone claiming under the transition rule, the model and trim still matter. Before the credit ended, all three 2025 Model 3 trims qualified for the full $7,500: the Long Range rear-wheel drive, the Long Range all-wheel drive, and the Performance. Each had to stay under the $55,000 sedan price cap.⁴

Every 2025 Model Y variant qualified, including the base rear-wheel drive, all-wheel drive, and Performance. Because the Model Y carries an SUV classification on its EPA fuel economy label, it fell under the higher $80,000 cap.⁴

The Model S and Model X did not qualify. Both exceeded the federal price thresholds.

Income and Price Limits Still Apply

If you’re claiming under the transition rule, the same eligibility rules that governed the credit during its active period still apply.

Your modified adjusted gross income cannot exceed:

$150,000 for single filers
$225,000 for head of household
$300,000 for married filing jointly

You can use your income from either the delivery year or the prior year, whichever is lower. If both years exceed the limit, you cannot claim the credit.⁵

On the vehicle side, the MSRP cap is $55,000 for sedans like the Model 3 and $80,000 for SUVs, vans, and pickups, which is where the Model Y sits. MSRP includes the base price and manufacturer-installed options but not destination charges or taxes.⁴

How to Claim It on Your Return

If you took the credit at the dealership as a point-of-sale transfer, the dealer already reduced your purchase price by up to $7,500 and got reimbursed by the IRS.⁶ Even so, you must file Form 8936 and Schedule A (Form 8936) with your return for the year the vehicle was placed in service. That filing reconciles the advance payment with your actual eligibility. If your income turns out to exceed the limits for that year, you’ll owe the credit amount back as additional tax.⁷

If you didn’t transfer the credit at purchase, you claim it directly on Form 8936 with Schedule A. You’ll need the vehicle identification number and a copy of the time-of-sale report the dealer submitted through IRS Energy Credits Online.⁸ The credit reduces your tax liability dollar for dollar, up to $7,500.

Don’t Resell Within 30 Days

Selling or returning the vehicle within 30 days of taking possession triggers a presumption that you bought it to resell. You lose the credit entirely, and if you already received it through a dealer transfer, you owe the full amount as additional tax on that year’s return.⁹

Used Teslas Are Out Too

The Section 25E credit for used clean vehicles ended on the same date. It had offered up to $4,000 or 30 percent of the sale price, whichever was less, on a qualifying used EV priced at $25,000 or less that was at least two model years old. Income caps were $75,000 single, $112,500 head of household, and $150,000 joint.¹⁰

The same transition rule applies. If you signed a binding written contract and made a payment on a used Tesla before October 1, 2025, you can still claim the credit when you take delivery. Otherwise, no federal credit is available on a used EV purchase.²

The Home Charger Credit Is Still Available

One EV-related credit remains partly alive. Section 30C covers 30 percent of the cost of a home charging station, up to $1,000 for personal use, for chargers placed in service on or before June 30, 2026.¹

There’s a location catch. Your home has to sit in an eligible census tract — either a low-income community as defined under the New Markets Tax Credit program, or a non-urban area.¹¹ If your address doesn’t qualify, the charger doesn’t qualify either, regardless of cost. The IRS provides a lookup tool for checking before you buy equipment.

State Programs Are Unaffected

The One Big Beautiful Bill changed federal law only. State-level EV programs — rebates, tax credits, reduced registration fees, HOV lane access — operate independently and continue to vary widely in amount and eligibility. If you’re buying a Tesla in 2026, checking your state’s current offerings is worth the time, because that’s where any remaining incentive is likely to come from.

1
Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under Public Law 119-21
2
Internal Revenue Service. One Big Beautiful Bill Provisions
3
Internal Revenue Service. Clean Vehicle Tax Credits
4
Internal Revenue Service. Topic B – Frequently Asked Questions About Income and Price Limitations for the New Clean Vehicle Credit
5
Internal Revenue Service. Credits for New Clean Vehicles Purchased in 2023 or After
6
Internal Revenue Service. Topic H – Frequently Asked Questions About Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit
7
Internal Revenue Service. Instructions for Form 8936
8
Internal Revenue Service. How to Claim a Clean Vehicle Tax Credit
9
Federal Register. Clean Vehicle Credits Under Sections 25E and 30D – Transfer of Credits – Critical Minerals and Battery Components – Foreign Entities of Concern
10
Internal Revenue Service. Used Clean Vehicle Credit
11
Internal Revenue Service. Frequently Asked Questions Regarding Eligible Census Tracts for Purposes of the Alternative Fuel Vehicle Refueling Property Credit Under Section 30C