Even the cheapest Tesla Model 3 now qualifies for the full $7,500 tax credit, thanks to recent updates made by Tesla and the US government’s revised guidelines. This news brings great savings opportunities for potential Tesla buyers across the United States.

Tesla has made changes to its website, indicating that not only the rear-wheel drive Model 3, but also its long-range and performance versions, now qualify for the maximum federal tax credit of $7,500. Additionally, the all-wheel drive, long-range, and performance models of the Model Y are also eligible for the same amount of savings.

The updated guidelines were issued by the US government in March as part of the Inflation Reduction Act rules signed by the president last year. These rules determine the eligibility of electric vehicles (EVs) for the federal $7,500 EV tax credit. According to the new guidelines, EVs using battery components that are at least 50 percent made or assembled in the US qualify for a tax credit of $3,750. However, they can only receive the full $7,500 credit if their manufacturer sources at least 40 percent of their critical minerals from the US or its free trade partners, excluding China.

Initially, several EVs were removed from the list of vehicles qualified for the tax credit when the changes were implemented. However, some vehicles, including Tesla’s rear-wheel drive and long-range Model 3, were later re-added. This meant that buyers could only subtract $3,750 from their taxes for these specific models due to the new guidelines. Fortunately, Tesla has now ensured that its new Model 3 deliveries meet the requirements for the full tax credit, although it is unclear whether the company modified the cars’ batteries or found new suppliers.

With this update, purchasing the standard version of the Tesla Model 3 becomes an even more affordable option in certain locations. In some cases, buyers may be able to acquire the vehicle for just a little over $30,000 or even less, particularly if their state offers additional incentives for EVs.


The availability of the full $7,500 tax credit for even the cheapest Tesla Model 3 is expected to encourage more consumers to choose electric vehicles and accelerate the transition to sustainable transportation. This development not only benefits Tesla as a manufacturer but also promotes the adoption of EVs and contributes to the overall reduction of greenhouse gas emissions in the United States.