Starting from July 1, 2023, all Colorado residents who purchase or lease an EV with a manufacturer's suggested retail price (MSRP) of up to $80,000 will be eligible for a generous EV tax credit of $5,000. This tax credit will remain in effect until January 1, 2025, after which it will gradually decrease until 2029.
This new law represents a substantial increase from the current state EV tax credits of $2,000 for new EV purchases and $1,500 for two-year leases. Moreover, beginning January 1, 2024, EVs with an MSRP under $35,000 will qualify for an additional tax credit of $2,500.
It's important to note that the benefits are exclusive to Colorado residents who pay taxes in the state. Attempting to claim the tax credit by crossing state borders won't be possible.
Let's delve into a practical example to illustrate the advantages of these new incentives. Suppose you're interested in purchasing a Tesla Model Y Long Range with Dual Motor All-Wheel Drive, priced at $50,490 before state sales tax. Not only does this model already qualify for the federal tax credit of $7,500, but it also qualifies for Colorado's state tax credit of $5,000 starting from July 1.
With the combined federal and state tax credits, the price of the Tesla Model Y drops to a compelling $37,990. In addition, some Colorado residents may even be eligible for utility rebates, further reducing the overall cost.