Colorado Doubles Tax Credit for Electric Vehicle Buyers

Colorado has made it even more affordable to purchase electric vehicles (EVs) by more than doubling the available tax credit to $5,000 for anyone who buys a new EV starting from July. This move could make a number of new cars more accessible to buyers.

Previously, new EV buyers could apply for a tax credit of up to $2,000. However, as of July 1st, 2023, this figure will increase to $5,000, as long as the car’s MSRP is not above $80,000. The state tax credit will stack on top of any federal tax credit, meaning the total savings could amount to $12,500.

From 2024 onwards, EVs with an MSRP under $35,000 will be eligible for an additional tax credit of $2,500, which could bring the savings up to $15,000 in total, provided that the same car qualifies for the full $7,500 federal tax credit. In theory, this could take a vehicle with an MSRP of $34,999 down to just $19,999.

To qualify for the tax benefit, one must pay taxes in Colorado. However, Colorado is generally quite friendly in terms of tax policy towards EV owners. It also offers up to $1,000 in tax credits for EV charging equipment and at least $300 to anyone who buys an e-bike.

This tax credit effectively makes the Tesla Model Y Standard Range a $34,990 car. Even the Long Range Dual Motor version comes in under $40,000. This is quite an attractive price for Colorado residents. However, it is important to note that one must pay taxes in Colorado to qualify for the tax benefit.

It remains to be seen whether other states will follow Colorado’s lead. However, one thing is certain: the $35,000 Tesla finally exists again, but only in Colorado, as long as Tesla does not increase the pricing on the Model Y Standard Range before July 1st.