Money Management

The Tesla Model 3 is one of the most popular electric vehicles. Read on to see how tax credits can make it even more affordable. 

Prior to the passage of the Inflation Reduction Act in 2022, Tesla vehicles had become ineligible for electric vehicle tax credits due to the large number of vehicles the company sold. But the act got rid of the per-manufacturer volume cap, making Tesla vehicles potentially eligible once again.

However, the rules governing electric vehicles and tax credits are rather complex, so here’s a quick guide to the Tesla Model 3’s tax credit eligibility and how much you could potentially get back if you buy one.

Current electric vehicle tax credit rules

Electric vehicle tax credits can save you as much as $7,500 on the purchase of a new vehicle. However, the requirements to claim the credit have changed significantly thanks to recent legislation, so here’s a rundown.

First, the credit is income restricted. To qualify, couples filing a joint tax return must have income of less than $300,000 in 2023. For single filers and heads of household, these thresholds are $150,000 and $225,000, respectively.

Second, the vehicle itself also must meet certain requirements, such as having a battery pack with at least seven kilowatt hours of capacity. And, its final assembly location must be in North America.

Finally, the maximum manufacturer’s suggested retail price (MSRP) is $80,000 for vans, SUVs, and trucks, or $55,000 for other vehicle types. This rule excludes certain popular models like the Lucid Air and Tesla Model S.

Is the Tesla Model 3 eligible?

Assuming that you meet the income requirements, Tesla Model 3 sedans with MSRPs of $55,000 or less are eligible for federal tax credits. However, due to some of the new calculation criteria put in place by the Inflation Reduction Act of 2022, certain Model 3s are only eligible for half of the maximum for deliveries after April 18, 2023.

Specifically, here are the tax credits each type of Model 3 is eligible for:

It’s worth noting that Model 3 vehicles can exceed MSRPs of $55,000 and therefore can become ineligible. In particular, the Model 3 Performance has an MSRP that starts at $53,240, but adding certain options could push it over the limit.

Also, these incentives are for personal vehicles. If you buy a Model 3 for your business or eligible tax-exempt organization, you can claim a credit of as much as $7,500 for any Model 3, regardless of which trim level you choose or what the MSRP is.

Other reasons to buy a Model 3

In addition to the federal tax credits, you might also be eligible for state tax incentives, depending on where you live. As one example, Massachusetts offers electric vehicle credits of as much as $3,500 on cars purchased for less than $55,000. So, that’s definitely worth looking into.

Additionally, there are other considerations when deciding on an electric vehicle. While electric power certainly isn’t free, buying an electric vehicle like the Tesla Model 3 can typically offer significant savings over the cost of gasoline in a comparable car. On the negative side, electric vehicles can be more expensive to insure than gasoline-powered vehicles due to their generally higher repair costs.

The bottom line is that the Tesla Model 3 may be eligible for tax credits depending on the exact specifications and MSRP of your vehicle. And if there is any gray area in your eligibility, it’s a good idea to consult with an experienced tax professional for guidance.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

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Whether you’re buying or selling a home, the wrong real estate agent may cost you money. Here’s what can happen when you land on the wrong agent. 

My husband and I have spent decades buying and selling homes. Like Goldilocks, we’ve experienced it all. Some real estate agents were too pushy, some too passive, and a couple were just right.

If there’s anything I can share with you, it’s the importance of working with the right real estate agent. And with 2 million real estate agents working in the U.S., there’s undoubtedly someone for everyone.

Based on my experience, here are five things that inevitably happen when you pick the wrong real estate agent.

1. They blow smoke

Once, when we were selling a home, we had an agent who greatly exaggerated the value of our property. It was during the Great Recession, and she said exactly what we wanted to hear. Yes, it was a great house, but it was in the middle of the housing crash. We should have been wary.

According to this agent, everything was great, and nothing needed to be changed. Again, words we hoped to hear.

I don’t care how lovely your property is; there’s always something you can do to improve it, especially if it’s not selling. Looking back, she should have suggested a concession or two to sweeten the pot. We could have paid for maintenance on the hot tub for a year or covered the following year’s HOA dues.

The house lingered on the market as it was, making buyers believe we would entertain lowball offers and, ultimately, costing us money.

2. They suddenly change their tune

The same agent came to us shortly after the house was listed, telling us we’d priced it wrong. My husband and I counted on her expertise, and the asking price was precisely what she suggested. I understand lowering the price on a property that’s becoming a stale listing. What’s more challenging to understand is dropping a price before the first full wave of potential buyers makes their way through.

If you feel you’re being played by a real estate professional who wants to make a quick sale, you know you chose the wrong person.

3. They juggle more than they can handle

If you’ve ever been to a hairdresser who juggles you and two or three other “important” clients, you know how frustrating the experience can be. By the same token, if your agent is so busy juggling clients that they don’t answer your calls (or at least get back to you), that’s not a great sign.

I’ve discovered that some agents can easily juggle a ridiculous workload and still be organized and efficient, but that’s not always the case.

You deserve someone who’s fully engaged, particularly when you’re taking so much money out of your bank account to make a home purchase.

4. They push you to make a poor decision

There’s no denying that a potential home buyer cannot dilly-dally in this market, but that doesn’t mean you can’t take a little time to decide. Here are some of the less-than-stellar decisions we’ve been encouraged to make and how they were presented to us:

“The homeowners have several other showings this afternoon. If you want this property, you will have to act fast. If you want to do it now, there are contracts in my car.” They tell you that overpaying for a property is the only way you’ll be able to buy a home. They suggest you contact your mortgage lender to ask if the loan amount you’ve been approved for can be increased. “Omit all contingencies. No homeowner will accept your offer if you demand a home inspection.” “The first offer you receive on your home is always the best. You should accept it even if it’s not what you want.”

Is it possible that a homeowner will reject an offer that includes contingencies or that your first offer on your home will be the best? Absolutely. But there’s a difference between an agent who educates you, providing evidence to back up what they say, and an agent who pushes you to close a deal.

5. They become angry when you’re honest

Unless you’ve signed a contract, no law says you must continue to work with an agent who’s not right for you. Once, when we were buying a home and realized that we were doing all the work, we told the agent that it wasn’t working out for us. We had just moved to a new city and needed more direction than he was willing to provide. We didn’t feel good about dropping him, but we knew he didn’t fit our needs.

What we got in response was an insulting letter telling us what a waste of time we were. That might have made sense if he’d spent more than an hour with us, but we were just beginning the house hunt.

Like any other professional, an excellent real estate agent knows how to handle people and certainly knows better than to insult those he comes in contact with.

The agent who sold our home last summer and the agent who helped us find a new one in another state were both fantastic. We may have gotten lucky, but I’d like to believe we’ve learned something from past mistakes.

Before you buy or sell property, interview several potential agents. Ask tough questions, and then do a gut check. Is this someone you trust to partner with you as you make one of the most significant financial decisions of your life? If so, you know you’ve found the right real estate agent.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Dana George has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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Your Amazon returns might start to cost you. Read on to learn more. 

One of the best things about shopping on Amazon is getting to enjoy free shipping and returns on the items you buy. If you purchase clothing, for example, and it just doesn’t fit right, you’re not automatically stuck with that charge on your credit card. Rather, most Amazon purchases are eligible for free returns.

But now, Amazon is changing its return policy slightly. And some customers could incur a small fee if they don’t follow the new rules.

A change to be mindful of

Amazon offers free returns at Whole Foods (which it owns), Amazon Fresh grocery stores, and Kohl’s (which it doesn’t own but has a partnership with). You can also return Amazon items at your local UPS store, and up until recently, that option was always free.

But now, Amazon has begun to charge customers $1 if they make a return at a UPS store when there’s a Whole Foods, Amazon Fresh, or Kohl’s closer to their delivery address. This fee won’t apply to every Amazon customer. But you may want to check to see if it applies to you — especially if you make frequent returns and don’t want to lose out on $1 each time.

Be careful with Amazon returns

Fee-free and hassle-free returns have long been a part of Amazon’s value proposition. But they’re also very costly for the online retail giant. By changing its return policy ever so slightly, Amazon is most likely hoping to discourage customers from making returns too frequently.

Incidentally, that’s something you may want to be mindful of, regardless of whether you’re in the zone of potentially being charged $1 for Amazon returns. There have been reports through the years of Amazon canceling accounts owned by people who abuse its return policy.

Now, the frustrating thing is that Amazon does not maintain an official policy on abusing returns. There’s no specific published number of returns (or percentage of orders returned) that puts customers at risk of having their accounts revoked.

But as a matter of common sense, if you return every other Amazon item you buy, and you make a lot of purchases on the site, you might put yourself at risk of losing your account. Return just 10% to 20% of what you buy, and you’re probably okay.

Also, keep in mind that while most items purchased on Amazon are eligible for free returns, some aren’t. Certain items, in fact, may not be eligible for returns at all. It’s always important to read the fine print before completing a purchase, especially if you’re buying something from a third-party seller on Amazon.

All told, shopping on Amazon is a great way to save money. But be careful with returns going forward in light of its new policy.

Granted, if you’re doing okay financially and only make the occasional Amazon return, you may not be so worried about a $1 charge here and there. But if you make a lot of returns, those $1 fees could add up, and that’s a scenario you’ll want to avoid.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon.com. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.

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Today’s CDs have some eye-watering interest rates, but they’re not the highest APYs in recent history. Find out when CD rates hit double digits. 

Certificates of deposit (CDs) give consumers the chance to lock up a lump sum for a specific amount of time in exchange for a fixed interest rate. The APY on a CD is typically higher than that of most savings and checking accounts, but on average lower than the returns on some high-risk investments, like ETFs and stocks.

Since the Great Recession years of 2007 and 2008, CDs have had rock bottom rates. In fact, as recently as 2021, banks were issuing CDs with rates as low as 0.30%, though that wasn’t as low as 2013 when most banks were paying half of that (0.15%) on 6-month CDs.

Yet recently CDs have had such high interest rates it’s compelled even some equity investors to snag what seems like unbelievable rates of fixed interest. Many short-term CDs are averaging between 4.25% and 5%, with one CD hitting 7% in April.

It’s easy to look at these rates and think, “My goodness, we’ll never see CDs rates this high again!” But not so fast — though CD rates are generous today, they’re not nearly as high as they were in the real golden age of CDs: the 1970s and 1980s.

CDs with an 18% APY? No way

Yes way.

The 1970s and 1980s witnessed some of the highest inflation rates in recent U.S. economic history, reaching more than 14% in 1980 before beginning a painful descent. The Federal Reserve employed severe interest rate hikes that brought the federal funds rate to its highest range ever: 19% to 20%. With that came higher borrowing rates, more expensive mortgage payments, and, yes — very, very generous CDs.

Throughout the 1970s, CD rates on a 3-month term averaged between 5% and 10%. That’s attractive, even by today’s standards. But 1981 was when the rates really soared. As the Fed employed a “whatever it takes” approach to squashing inflation, 3-month CD rates began to average 17% to 18%, with some reaching above that.

Double-digit returns continued until roughly 1984, when they cooled off. By the end of the ’80s, rates continued to trend downward — with brief periods of above average APYs — before hitting rock bottom in 2007.

Could today’s CD rates hit double digits?

At this point, it appears unlikely 2023 CD rates will climb as high as they did in the 1980s.

Based on recent data, the economy appears to be slowing down. The Consumer Price Index (CPI) rose 5% annually in March, down from 6% in April. And even though the U.S. job market seems unscathed — with no month-to-month change in the unemployment rate — the nation’s GDP grew only 1.1% in Q1 2023, down from 2.6% in Q4 2022.

That said, the Fed has not announced it will pause its interest rate hiking campaign. But its language has hinted that it might, which has many economists believing that it’s very likely it will.

Since it’s unlikely CD rates will go higher, they’ll likely take one of two paths: stay the same or drop. Either way, if you plan on locking up some cash in a CD, I wouldn’t wait to see what happens. Today’s rates are still higher than we’ve seen since the early 2000s, and they might not stay this way for long.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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