Texas offers $2,500 Model Y lease rebate on top of the federal tax credit

The state of Texas has stepped in to compensate for the loss of the federal new EV tax credit somewhat, benefitting both current and future Tesla owners in the process.

Texas is now offering grants for buyers of electric cars under its Light-Duty Motor Vehicle Purchase or Lease Incentive Program (LDPLIP). The state's incentive is "for purchasing or leasing new vehicles or conversion systems, powered by alternative fuel," and Tesla vehicles like the Model Y certainly fit that description.

Besides electricity, the "alternative fuel" vehicle category here also includes those with gross vehicle weight rating of 10,000 pounds or less that are plug-in hybrids, or run on LPG, CNG, and hydrogen, too. The best part is that even those who purchased or leased a Tesla with the tax credit in September, can still apply for the state rebate, it seems.

A person or organization who got a Tesla after September 1, 2025, and who have applied for, or already obtained a Texas title and registration, are all eligible, since the applications for the LDPLIP program can only be submitted after delivery.

The program will run until 5 PM on March 2026, or while funds last, and will disburse up to $2,500 per eligible electric vehicle like the Tesla Model Y, or up to $5,000 for one running on LPG or CNG.

The full $2,500 grant amount will be disbursed to those who purchased a Model Y outright, or leased it for three or more years. Those who leased a Tesla for two years will get 66% of the grant, or $1,665, and, finally, short-term leases of less than two years will only get a third of the Texas subsidy, or $832.50.

As for the documents required to obtain the $2,500 grant (even those who already got a Model Y with the federal tax credit in September can apply), the Texas Commission on Environmental Quality lists them as follows:

• Completed and signed IRS Form W-9.
• Texas title and registration or application receipts Both your Vehicle Title and Registration.
• Completed and executed purchase or lease agreement signed by the applicant and seller.

As a proof of purchase, Texas will also accept a buyer’s order together with a canceled check or a bank statement showing payment in full, as well as a finance agreement for a loan or retail installment contract signed by both the applicant and the financial institution. Individual owners also have to present their state ID, such as a driving license. The LDPLIP grant program in Texas will run while funding lasts on a first come, first served basis.

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