Colorado's lawmakers are about to make electric vehicles (EVs) much more affordable for the residents of the Centennial State. Dubbed House Bill 23-1272, it was signed into law by Governor Jared Polic on May 11, 2023, and it provides a $5,000 tax credit to EV buyers.

Currently, the state already offers a $2,000 tax credit for Coloradoan EV purchasers. But from July 2023 until January 2025, that figure will jump to $5,000 per the new legislation. The only caveat is that the EV cannot exceed the manufacturer's MSRP of $80,000.

The best part about Colorado's new EV tax credit law is that it is in addition to the $7,500 federal EV tax credit from the Inflation Reduction Act - assuming the car qualifies for it. The feds recently released more stringent rules for this, but in a nutshell, cars with mostly American-made parts fit the bill. This includes models like the Tesla Model 3, Tesla Model Y, Ford Mustang Mach-E, Chevrolet Bolt EV, and Cadillac Lyriq.

In the context of the new EV tax credit bill from Colorado, buyers of the entry-level Tesla Model 3 can bring down its price to $35,240 from its MSRP of $40,240 after the $5,000 credit from the state. If the federal credit is applied, theoretically, the Tesla model's price could be as low as $27,740. That puts it within the same price group as the Honda Civic Si.

And of course, cheaper EVs will become even more attractive buys, especially for budget-conscious Colorado residents. With the new bill, the Chevrolet Bolt EV's $26,500 MSRP can be brought down to $21,500. Theoretically, it can even go further down to just $14,000 with the federal EV credit. We said "theoretically" as America's cheapest EV will be discontinued by Chevy by the end of 2023. So if you're a Colorado resident who's looking to get the Bolt, you better get on with it once July hits.

Note that the tax credit for EVs detailed here only applies to Colorado taxpayers. There is also the fact that this EV tax credit will also see incremental reductions after 2025 and until 2029.