IRS Reveals Which Tesla Models Qualify for the 2023 U.S. Tax Credit

The IRS has released which Tesla models will qualify for the 2023 tax credit

Tesla

As of January 1, 2023, Americans can claim a $7,500 tax credit when buying a Tesla (and other electric vehicles). The Inflation Reduction Act allows eligible buyers the opportunity to claim a clean vehicle tax credit of up to $7,500 under Internal Revenue Code Section 30D.

We knew this was coming, and it slowed demand as shoppers were delaying their purchases until the new year. However, Tesla introduced an end-of-year sale, discounting their vehicles by $7,500 to encourage people not to wait.

Tesla Models That Qualify for the Tax Credit

The Tesla discount disappears on December 31, 2022, and the new government tax credit kicks in. But it is important to note that not all Teslas qualify for the clean vehicle tax credit. Model S and Model X are not on the list of eligible vehicles due to price, but the rear wheel and long-range versions of the Model 3 did make the list if the manufacturer's suggested retail price is below $55,000.

Six versions of the Model Y also made the list. They include the all-wheel drive, long-range and performance versions in the five-seat and seven-seat variations. Interestingly, Tesla does not produce a Model Y Performance in the seven-passenger setup, but it’s available for credit.

The IRS appears to work closely with vehicle manufacturers to determine eligible models. This could be telling of what Tesla plans to offer in 2023.

We may not only see a seven-seater performance Model Y, but we may also see Tesla reintroduce the Long Range Model 3 or Model Y for under $55,000 in 2023.

The Model Y all-wheel drive, long-range and performance five-seat variants do not currently qualify for the tax rebate according to the IRS since their MSRP is above the $55,000 threshold. We'll have to see if Tesla makes any changes to these models to get them under the $55,000 MSRP limit.

Older EVs also Qualify

The tax credits are not just for vehicles purchased in 2023. According to the IRS’ website, purchases made between August 17 (when the legislation was announced) and December 31, 2022, may also qualify for a tax break. There is also a used EV tax credit allowing consumers tax credits for up to $4,000 or 30% of the cost of a used EV that’s at least two years old.

To check if your vehicle meets requirements, use the vehicle identification number decoder on the Department of Energy’s website.

What is the Inflation Reduction Act?

The government says the Inflation Reduction Act is “the most significant climate legislation in U.S. history.” It includes $739 billion aimed at “green power, lower costs through tax credits, reduce emissions, and advance environmental justice.” When announced, the government said, “It will offer new access to tax credits as well as grants and incentives to reduce air pollution.”

The Inflation Reduction Act also has several credits available for EV charging. There is a property credit for companies that install EV chargers. The IRS will offset up to 30 percent of the total costs of purchase and installation of charging equipment, up to $100,000 per charger. Experts believe this new legislation will help the U.S. reduce emissions by 40% by 2030.

Elon Musk Shares His Thoughts on Tesla, SpaceX, and xAI in Interview

Reuters

In a recent interview at the Qatar Economic Forum, Elon Musk answered questions covering a wide array of topics. During this interview, he provided some insights into Tesla, its roadmap for autonomy, his commitment to the company, and then delved into SpaceX and xAI.

It was an interesting interview, run by an interviewer who was ready to pick at Elon’s faults, but nonetheless, he came out standing strong and with a clear focus. Let’s take a look at everything discussed during the interview.

Tesla

One of the key items addressed by Elon during this interview was Tesla’s global presence and markets. Elon noted and agreed that Europe is currently Tesla’s weakest market, but even so, sales for Tesla continue to perform well within expectations for this year. He attributed much of the decline in sales to the ramp of the Model Y, but also linked some to his public persona - but more on that later. 

What’s key here is that Elon noted that Tesla has built a global core customer base that is faithful to the brand and excited to see what’s next at every turn, which means that Tesla is in good shape, even with some regions seeing reduced sales.

Covering autonomy, Tesla’s focus remains on the advancement of autonomous driving in the near and long term. The upcoming launch of the Robotaxi network in Austin is an important near-term milestone and represents a critical phase for Tesla. If the launch goes as planned, Tesla plans to expand to additional regions and roll out Unsupervised FSD to customers.

Elon as CEO

Regarding his own role, Elon confirmed that he intends to remain at the head of Tesla as CEO for the foreseeable future, barring any unforeseen circumstances. He also mentioned that this commitment is tied to ensuring he has sufficient voting control to prevent potential ousting by activist investors rather than being primarily about his compensation package. 

Tesla has been making moves to prevent further activist investors from filing suits against the company, with the latest step being to re-incorporate in Texas and adopting a new company policy that prevents shareholder lawsuits from those that own less than 3% of the company.

The interview also touched on some of the more challenging aspects that Elon has been exposed to recently. He acknowledged that some recent negative events and narratives surrounding Tesla have taken a personal toll on him, as well as a toll on the company. While he didn’t go into specifics, Elon acknowledged at the Q1 2025 Earnings Call that Tesla has suffered brand damage as a result of his work with the current US administration and that his reduced role at D.O.G.E. should help to reduce further damage.

SpaceX

Shifting the sights from the roads to the skies, SpaceX’s core business remains firmly centered on a few key aspects. That is rocketry, Starlink, and Starlink’s terminals. Elon did note that there is a potential to take Starlink public, but he isn’t in any immediate rush, given the continued and increasing growth of the Starlink user base worldwide. Starlink would need to further expand and provide additional services, like the upcoming Direct-to-Cell, before an IPO would be considered.

The next space-based topic was Starship. Starship is the cornerstone of SpaceX’s plans to colonize Mars, and the full reusability of Starship is SpaceX’s next step in achieving that goal. Once Starship becomes fully reusable, the cost of access to space, the Moon, and Mars will become drastically lowered, enabling further movement towards the greater mission of making humans a multi-planetary species.

xAI and AGI

The conversation also took a turn into the fields of AI. Elon has expressed views that many well-established industries are overregulated while new and upcoming industries, like AI, are grossly underregulated. Once again, Elon is advocating for some level of government oversight or regulation to ensure the responsible development of AI technologies.

This is due to the potential risks that Artificial General Intelligence (AGI) could pose to humans and society as a whole. AGI is a focus for many AI companies who are pursuing truly generalized artificial intelligence that can understand and learn on its own. However, AGI also invokes thoughts of Skynet - the AI built by Cyberdyne Systems in the Terminator franchise. 

Preventing and regulating the development of AGI to ensure that it stays within the bounds of human control will be key, and that forms the basis of Elon’s concerns with the rapid rate of advancement of AI today. In particular, Elon mentioned his critical views of OpenAI’s shift from a non-profit, open-source model to a for-profit, closed-source model that is searching for AGI.

Neuralink

Elon also touched on Neuralink just briefly. He highlighted that the company and its engineers are working on new advancements aimed at restoring capabilities, including sight, for individuals with specific medical conditions. Neuralink is already providing real humans who previously lacked the ability to communicate or interact with the world in an easier way.

The interview was pretty broad and covered Elon’s entire spectrum of companies - maybe just stopping short of touching on The Boring Company. You can check out the interview for yourself below.

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Tesla's New Model S and Model X Spotted: New Color & Grill, Ambient Lighting and Front Bumper Camera

klwtts/X

Tesla’s long-anticipated refresh of the Model S and Model X is drawing closer, and we’re finally getting a clearer look at what to expect. Although the update is relatively minor, it does help freshen up the look of the Model S and Model X since their redesign in 2021.

A camouflaged Model S was spotted at the Nürburgring just days ago, revealing new front and rear bumpers along with Tesla’s long-awaited addition: a front bumper camera.

New Grill

klwtts/X

While the camouflage made the grill-like opening at the front of the vehicle hard to spot, it was evident something was there. However, new photos shared by The Kilowatts show that Tesla is covering up this opening with a material that has a carbon fiber finish, at least on the Plaid variant.

While we were hoping for more drastic changes, such as a grill-less look with a light bar, similar to the new Model Y, it looks like that won’t happen with this refresh.

The limited design changes suggest Tesla may be trying to limit tooling and manufacturing changes for these lower-volume vehicles. While the headlights already support adaptive beams, they remained unchanged from the current Model S and Model X.

Our best look at the new front bumper camera on the upcoming Model S

klwtts/X

Rear Diffuser

klwtts/X

Tesla has also updated the rear diffuser, though it’s unclear if this will be exclusive to the Plaid version. While the refreshed Model Y moved its rear camera up into the rear trim piece, the Model S keeps it in the same location as the previous generation.

Ambient Lighting Arrives

For the first time, we’re getting a look at the refreshed interior — and there’s one noticeable addition: ambient lighting. This feature, which is now available on all of Tesla’s other vehicles, is finally making its way to the Model S and Model X. The implementation appears closer in style to the Model Y, with lighting running along the door panels but stopping about halfway down before continuing on the rear doors.

While ambient lighting is primarily aesthetic, Tesla has been expanding its use for more dynamic and interactive features.

Recent Ambient Lighting Additions

Over the last year, Tesla has made the ambient lighting feature more useful by integrating it with other Tesla vehicles. For example, Santa Mode and Rainbow Road easter eggs will now take advantage of the ambient lighting, with Santa Mode cycling the colors between red and green for a Christmas flair [videos], while Rainbow Road cycles the colors of the rainbow.

Tesla has also added other little additions, such as turning the ambient lighting red when Service Mode is active in the vehicle. They have also added additional options in recent updates to ambient lighting, such as the ability to choose the brightness of the lights and choose whether they'll always remain on or only come on at night.

New Exterior Color

klwtts/X

The refreshed Model X was also spotted in a new exterior color, similar but not identical to the Glacier Blue available on the new Model Y outside North America.

Launch Timeline

Although Tesla hasn’t officially said anything about a new Model S besides that, it’ll receive some “love” later this year. The Kilowatts noted that Tesla doesn’t have any Model S or X vehicles in their Fremont outbound lot, making it seem like these models could be announced any day now.

While the updates are relatively minor in terms of body redesign, the addition of the front bumper camera and ambient lighting are very welcome additions.

Stay tuned to see if there are any additional changes to these vehicles.

New factory blue, coming soon to a Model X near you pic.twitter.com/3CuN4j1ipq

— The Kilowatts 🚗⚡️ (@klwtts) May 22, 2025

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