How Much is the Electric Tax Credit Increasing?
The state of Colorado is already one of the most EV-friendly states in the nation. It has good charging infrastructure and already offers a $2,000 tax credit, on top of federal incentives, for purchasers of electric cars. Starting in July, residents of Colorado will benefit even more if they switch to electric, as the state will begin offering EV buyers a $5,000 credit that can be stacked with the $7,500 federal incentive.
Colorado’s new EV tax credit is just one of several bills passed in May that are intended to accelerate the adoption of cleaner transportation. Bill HB23-1272, signed into law by Governor Jered Polis, is called Tax Policy That Advances Decarbonization. Among its many measures is a $3,000 bump to the state’s EV tax credit for passenger cars, as well as the extension of the credit to electric medium- and heavy-duty trucks for commercial use. The bill also creates a new state-wide $450 incentive for electric bikes, and increases tax credits for in-home heat pumps.
Save up to $12,500 on Applicable Electric Cars
With the new legislation, Colorado becomes the most financially-attractive place in America to purchase an electric car. Provided you meet the requirements for the federal tax incentive – which imposes income limits – and the vehicle you are considering is made in North America and has North American battery components and lists for under $80,000 (trucks and SUVs) or $50,000 (cars), you could get up to $12,500 back in tax credits. All those credits could reduce the price of a Chevrolet Bolt to just over $15,000, or a Tesla Model 3 to under $30,000.
Things get even more attractive for electric car buyers in Colorado starting in January 2024. Next year, the state is bringing in an additional tax credit of $2,500 – on top of the $5,000 – for EVs with a starting MSRP of under $3,500. Stacked with the federal tax credit for eligible vehicles and buyers, that could mean a total of $15,000 in available credits.
If you are a business owner that operates a commercial fleet, you may now be eligible for state tax credits for medium and heavy-duty electric trucks. Between now and 2032, Colorado will offer up to $12,000 for electric trucks, which will help fleets in the state meet recently-adopted Advanced Clean Truck rules. The tax credits can be layered with federal tax credits as well, with a maximum total savings of up to $40,000 per truck.
When Would Be a Good Time to Buy an Electric Vehicle?
It’s worth noting that these high credits won’t last forever. In fact, when the state originally introduced its EV tax credits, they were set at $5,000, before being reduced to $2,000 in 2021. The $5,000 state credit, and $2,500 credit for inexpensive EVs, will be reduced progressively through 2029. So if you’ve been thinking about making the switch, and you live in Colorado, now may be your best time.