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One of the benefits I got from purchasing my Tesla Model Y in 2023 is the $7,500 federal tax credit and my state tax credit.
When I purchased my Tesla Model Y, I asked if it qualified for tax credit and the steps I needed to take to get it. The sales representative told me to talk to a tax professional to answer that question. Since I’ve been out of the tax field for a few years, I texted one of my friends who is a tax partner to confirm my purchase qualified for the tax credit.
As a former tax accountant, I typically filled out the correct forms and attached the corresponding documents for the client to get their clean energy tax credit. I didn’t think about it any further and figured I just file the correct tax form during tax season.
After scrolling through Reddit and seeing this post, I panicked.
Tesla, as the seller of the vehicle, had to register my taxpayer identification number and vehicle identification number to the IRS by January 15, 2024, to be eligible for the tax credit. If your vehicle is not registered timely with the IRS, it will not be eligible for the Clean Vehicle Tax Credit. The taxpayer identification number will be your social security number (SSN) if you are an individual or an Employer Identification Number (EIN) if it was a business that made the purchase.
I went on the Tesla website following the navigation commenter provided to see if the IRA Clean Vehicle report was under my profile. Many people said they found it, so I was hoping the same for me. Here’s exactly where you go:
Tesla Login Page > Find your vehicle > Manage > Documents (left side) > IRA Clean Vehicle Credit Report
If you sold your Tesla or no longer have it, check under “Previously Owned Vehicles” to find the file.
After discovering the IRA Clean Vehicle Report was not in my profile, I emailed the local Tesla dealership where I purchased the vehicle to request the form late at night before bed. After not hearing back by the end of the next business day, I called Tesla’s customer service phone number to get a direct person to handle the issue at 1-888-518-3752.
The representative told me all customers who are affected by this will get an in-app message early next week to enter the information they need for the tax incentive. If I don’t see it early next week, I can call the customer service line for assistance.
I will be monitoring the Telsa in-app message diligently over the next few days and plan to call the customer service phone number back if I don’t see a message come through by January 9, 2024.
It’s no surprise scrolling through Tesla’s Reddit page that you find educated answers regarding the new clean vehicle tax credit. As I’ve been out of the field for a few years, it’s great to see direct links to the tax code and IRS website to understand this tax credit.
Understanding the Clean Vehicle Tax Credit
A purchase of a Tesla vehicle may qualify for the Clean Vehicle Tax Credit.
Tax credits directly decrease the amount you owe in taxes and come in two forms: refundable and nonrefundable. A nonrefundable tax credit can reduce your tax liability to zero dollars, but you do not get a refund for any amount below zero dollars. However, a refundable tax credit reduces your tax liability, and you can get a refund for any amount below zero dollars.
The Clean Vehicle Tax Credit is considered a nonrefundable tax credit. It means my purchase of the Tesla Model Y will reduce my tax liability, but I will not get a refund.
Tax Planning for Tax Credit
If you are planning to purchase a vehicle that qualifies for the Clean Vehicle Tax Credit, tax planning might be helpful to take full advantage of the non-refundable tax credit. Here is my Referral Link to earn awards like 3 months of Full Self-Driving Capabilities if you purchase a Tesla using this link.
Honestly, I am pretty disappointed in myself for the lack of tax planning this year. If I were to go back in time, I would stop the extra tax withholdings and increase my tax liability to take full advantage of the Clean Vehicle Tax Credit. I was withholding an extra $94 a paycheck based on my 2022 tax calculations, which would have been about $2,500 of credit I could have taken advantage of.
The extra tax withholding is on a case-by-case basis and might be applicable in your situation, with or without the tax credits. To avoid underpayment, your taxes must be the lesser of owing less than $1,000 in taxes or paying 90% of your taxes for the year. You can use the IRS Tax Withholding Calculator to determine the right amount of tax withholding for your situation.
State Tax Credit
In addition to the federal tax benefit, you may qualify for a state tax credit too! I am a Colorado Residence and the Tesla Model Y qualifies for the Colorado Innovative Motor Vehicle Credit by meeting these criteria:
- Four wheels, maximum speed of at least 55 MPH
- Weighs 4,416 pounds which is under the 8,500 weight limit
- New at the time of purchase
- Battery is capable of being recharged from an external power source with a capacity of at least 4 kWh
- Titled and registered in Colorado.
Since I purchased my Telsa Model Y in March 2023, I only qualify for a $2,000 credit. Any purchase after July 1, 2023, and through 2024 qualify for a $5,000 tax credit. I will claim the credit by submitting a DR 0617 tax form with my Colorado submission. It is a refundable income tax credit, so I will be getting a refund for this!
Overall, I am happy with my Tesla and the tax credit is an extra perk for purchasing an electric vehicle. I hope you’re able to figure out the best route to take full advantage of the tax credit for 2023 or years to come if you’re planning to purchase an electric vehicle.
Here’s my referral link if you plan on getting a Tesla for awards such as 3 months of Full Self-Driving Capabilities I wish I had when I made my purchase!