Tesla referral rewards and redemptions will be taxed in the US

Tesla has started advising owners in the US that if you redeem more than $600 worth of items and payouts through the referral program, the value is considered as income and will be taxed. The notification was sent through the mobile app, and leads to questions about how some of the rewards will be valued.

Tesla’s referral program has gone through many iterations over the years, with rewards ranging from a yet-to-be-built Roadster (or two), to free Supercharging. After a brief hiatus, the company brought back the referral program to the US late in 2022 with a completely new look. Under the revamped referral program, owners could earn credits for each referral, which could in turn be redeemed for various items like accessories, merchandise, apparel, and software updates like Acceleration Boost and Full Self-Driving (FSD) Beta.

However if you have been able to earn some referrals and have been redeeming your credits, you could be getting a tax bill for those redemptions. According to a message sent to owners in the US through the mobile app on Tuesday, if you redeem more than $600 worth of “program awards and payouts,” the IRS considers that as income and you will be taxed. Tesla said it will “provide you with a form 1099 to support your tax filing.” (via @TESLA_winston)

tax message
Credit: @TESLA_winston
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Unfortunately that’s as much information as Tesla has provided thus far, but it leads to questions about how some of the rewards will be valued. For merchandise, accessories, and apparel items, that will be easy as those have a retail value on the Tesla Shop. However it is a different story for Supercharger credits, which have no given value per se, and the value varies depending on where you live (different Supercharger rates). There is also the 3 months of FSD or Enhanced Autopilot. Tesla does have set prices to purchase these outright, but how will 3 months of access to these items be valued?

For those that have redeemed for rewards, depending on what you picked, the taxable earnings can quickly add up to above the threshold to be taxed. One of the most popular referral redemptions has been the one with the best value, which happens to be the Acceleration Boost, which costs US$2,000, but requires only 9,500 credits, giving it a value of 4.75 credits per $. Given the wording used in the message of “payouts,” if you received a discount on your new Tesla purchase, that will likely also be considered as income and be taxed.

No Canadians have reported receiving a similar message, and we’re not tax experts to know if we will. If anyone is more familiar with the Canadian tax system to know if referral redemptions will also be taxed in Canada, please let us know in the comments below.

Are you buying a Tesla? If you enjoy our content and we helped in your decision, use our referral link to get a three month trial of Full Self-Driving (FSD).
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