The Tesla Model Y is the most popular electric vehicle in America. It is taking over the country because of its practicality and sporty demeanor. Tesla has already established itself as a force to be reckoned with in the EV space. It’s responsible for most of the electric vehicle market share. Unfortunately, many drivers are missing out on a huge deal. Why aren’t more Tesla Model Y owners taking advantage of the federal electric vehicle tax incentive?

How drivers could save thousands on the Tesla Model Y

As of the time of publishing, Tesla’s small electric SUV, the Model Y, qualifies for the full federal electric vehicle tax credit. This means drivers can potentially get a refund of up to $7,500 after they file their taxes (and include the purchase of the vehicle). So, how does this work, and how come some drivers are missing out on the serious savings?

Drivers can claim the EV tax incentive by filling out the IRS Form 8936 alongside their tax return. This form asks for vehicle identification information like the VIN. The form helps the IRS classify your EV and confirm its eligibility for the tax credit.

Once the form is filled out properly with your tax return, you will receive the appropriate discount on your annual income taxes, which could result in a refund. If you don’t get the entirety of the incentive value refunded, it’s because it’s being used to reduce your total annual tax expenditure.

The reason so many drivers are missing out on $7,500 in Tesla Model Y savings is simply because many consumers don’t know that the incentive exists. Analytics firm BlueLabs found that 4 out of 10 American drivers who participated in a poll have no idea what the EV tax credit is or how it works. The novelty of the incentive is causing many drivers to miss out on it entirely.

Does the tax credit change which Tesla Model Y you should get?

So, now that you know that the EV tax incentive exists and how to use it, which Model Y should you go for? Should you use the tax credit to make the base model even more affordable, go for the Long Range, or treat yourself to a Performance model? Here are the prices of each 2023 Model Y configuration before and after the application of the EV incentive.

The base model small electric Tesla SUV is especially attractive considering the tax incentive. That said, the most practical versions of the EV are either the Long Range or Performance trims because of their superior driving ranges. The 2023 Tesla Model Y Long Range gets 330 miles of estimated driving range (70 more miles than the base model).

The Model Y Performance gets 303 miles of estimated driving range (43 more miles than the base model). Furthermore, since real-world driving range tends to be very different from the estimated driving range, the two upper trim levels are the safest bets.

Now, as for which model you should choose between the Long Range and Performance, it depends. Most drivers will benefit from the superior range of the Long Range model and appreciate its affordability. That said, those who want to feel the full potential of the nameplate should opt for the aptly named Model Y Performance.

Why are so many drivers getting the Tesla Model Y?

The Model Y has become the most popular vehicle in the world, dethroning the Toyota RAV, for a number of reasons.

Reasons why the Tesla Model Y is popular

1. Affordable pricing for a modern EV.
2. Stellar performance specs.
3. Sleek and attractive exterior design.
4. Modern tech and refined cabin.

Tesla’s small electric SUV checks several boxes for drivers. It is the electric vehicle that drivers are most comfortable transitioning to in 2023. The Long Range model has enough driving range to cure range anxiety. Additionally, the Performance trim is quick enough to excite most drivers (0-60 miles per hour in 3.5 seconds). Thus far, it doesn’t seem like any EV has a chance to slow the Model Y’s sales success down.