Colorado introduces tax credit to help slash cost of new EVs by one quarter

The US state of Colorado is seeking to supercharge its electric vehicle uptake by introducing a $US5000 ($A7650) tax credit on the purchase of new electric vehicles.

The new state tax credit is in addition to the federal tax credit of $US7500 from the Inflation Reduction Act, meaning that people who purchase new qualifying EVs in Colorado are now eligible for $US12,500 ($A19,100) of tax credits, or around one quarter of the cost of a Tesla Model Y.

The new bill states that from July 1, 2023 all Colorado residents who purchase an EV with a MSRP up to $80,000 qualify for the state’s $5,000 EV tax credit.

The $5000 tax credit is available until January 1, 2025 and is then reduced to $3,500 until January 1, 2026 before being scaled down again to $1,500 until 2027.

The bill which also includes other tax credits for industrial facilities to implement greenhouse gas emissions reduction improvements and the deployment of heat pump technology was signed by Governor Jared Polis earlier this month.

In a press release the Colorado government said the legislation is part of its efforts to make sure Coloradans have “low-cost, reliable energy.” Credits and rebates are also being offered for electric bikes, high-efficient electric heating appliances, and other technologies.

Coloradans will save $12,500 on US built Tesla Model Y

The new tax credit means that Coloradans who purchase the US made Model Y are eligible for both the $7,500 US IRA EV tax credit and the new $5000 state tax credit.

This means the price of a new duel motor Tesla Model Y Long Range drops from $US50,490 to just $US37,990 ($A58,000).