Understanding Tesla Tax Credits: What Qualifies And How To Claim Them

February 25, 2023

Introduction

Tesla is one of the most innovative companies in the world, and its electric vehicles are becoming increasingly popular. As a result, many people are wondering if they can qualify for tax credits when purchasing a Tesla. The answer is yes, but there are some important qualifications that must be met in order to receive the credit. In this blog post, we will discuss what qualifies for a Tesla tax credit and how to claim it.

What Qualifies for a Tesla Tax Credit?

The first step in understanding what qualifies for a Tesla tax credit is to understand the different types of credits available. The federal government offers two types of credits: the Plug-in Electric Drive Vehicle Credit (PEDVC) and the Alternative Motor Vehicle Credit (AMVC). The PEDVC applies to all-electric vehicles, including Teslas, while the AMVC applies to hybrid vehicles.

In order to qualify for either of these credits, your vehicle must meet certain criteria. For example, it must be powered solely by an electric motor that draws energy from a battery with at least four kilowatt-hours of capacity. Additionally, it must have been purchased new from an authorized dealer and used primarily in the United States.

The amount of credit you can receive depends on several factors, including the type of vehicle you purchase and its battery capacity. For example, if you purchase a Tesla Model S with an 85 kWh battery pack, you could receive up to $7,500 in federal tax credits. However, if you purchase a Tesla Model 3 with a 75 kWh battery pack, you could only receive up to $3,750 in federal tax credits.

How To Claim Your Tesla Tax Credit

Once you have purchased your new Tesla and determined that it qualifies for one or both of the federal tax credits mentioned above, it’s time to claim your credit! To do this, you will need to fill out IRS Form 8936 and submit it along with your taxes each year. This form will ask for information about your vehicle such as its make and model as well as its battery capacity so make sure you have this information handy before filing your taxes!

Once you’ve submitted Form 8936 along with your taxes each year that you own your vehicle, you should receive your credit within 8-12 weeks after filing your return. Keep in mind that this credit is nonrefundable so if it exceeds the amount of taxes owed on your return then unfortunately any excess amount will not be refunded back to you!

State Tax Credits For Teslas

In addition to federal tax credits for Teslas there are also some states that offer additional incentives such as state tax credits or rebates when purchasing an electric vehicle like a Tesla. These incentives vary from state to state so make sure to check with your local government or Department of Motor Vehicles (DMV) before making any purchases! Some states may even offer additional incentives such as free charging stations or access to HOV lanes which can help offset some of the costs associated with owning an electric vehicle like a Tesla!

In conclusion, there are several ways that individuals can qualify for tax credits when purchasing a Tesla including both federal and state incentives depending on where they live. It’s important to understand what qualifies for these credits as well as how they can be claimed so that individuals can take full advantage of them when making their purchase!