The used electric car tax credit was a monumental addition to the Inflation Reduction Act. Worth up to $4,000, the credit is applicable for used EVs, PHEVs, and FCEVs selling for under $25,000. However, there was an issue. Used Teslas were never on the Internal Revenue Service's (IRS) qualification list. 

In a report by Clean Technica's Paul Fosse, the author concluded that used Teslas wouldn't qualify for the tax credit as the automaker had "forgotten" to file the applicable paperwork to allow used examples to qualify. Today, this seems like an accurate assertion. 

In a recent change of events, used Teslas now appear to qualify for the $4,000 used EV tax credit. The IRS updated its website on August 3, 2023, providing a link to the EPA's website instead of the list of qualified manufacturers. The EPA's site displays all Tesla vehicles as candidates for the used EV tax credit. 

As evidence that this may signify a change within the IRS' vehicle qualifications, the EPA tool won't display the Honda Accord PHEV, meaning it won't qualify. The Accord PHEV was already unqualified due to its battery not meeting the size requirement of 7 kilowatt-hours. However, the site will display the full Tesla lineup, and they were never featured on the original list (last updated July 13th). 

While it isn't explicit that used Teslas qualify, all signs point in that direction. We will have to wait until more information releases from both the IRS and Tesla. Nevertheless, plenty of early Model S sedans will qualify, but a limited supply of sub-$25,000 Tesla Model 3s are available to qualify. 

For other makes and models, please use this list below to determine your qualification status:

  • Individuals must make under $75,000 annually to claim the credit. The head of household can make up to $112,500, and joint filers can make up to $150,000. 
  • Buyers must purchase the vehicle at a dealership, and the purchase price must be under $25,000.
  • The car must be at least two years old. 
  • The vehicle can be a plug-in hybrid, though the battery would have to be at least 7kWh (for example, the Mercedes C350e, Toyota Prius Plug-in (not Prime), and the Honda Accord Plug-in Hybrid won't qualify, among others).
  • If the vehicle costs $13,333 or less, the tax credit will only cover 30 percent of the price.
  • A previous owner cannot have already claimed the used EV tax credit on it. 

The image below appears to confirm that all used Teslas do qualify for a tax credit.

EPA Tax Credit Guidance 2023
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