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Electric vehicle tax credits, discounts, and rebates in Colorado

Electric vehicles

onurdongel via istockphoto.com | Used by permission

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Alexandra Simon

Former Public Health Advocate, CoPIRG Foundation

All the info you need about rebates, tax credits and other state and federal discounts available for new and used electric vehicles in Colorado in 2024

As electric vehicles make up an increasingly large portion of new car sales, the number of different incentives and rebates can feel daunting. As of January 2024, here’s a quick guide to how consumers in Colorado can save money on these vehicles through state and federal tax credits:

State and federal discounts on electric vehicles (as of Jan 2024):

Federal Electric Vehicle Tax Credit

(Qualified Plug-in Electric Drive Motor Vehicle Credit)

  • How much? Up to $7,500
  • Eligible Coloradoans: Individuals with an income of $150,000 or less or married joint filers with income of $300,000 or less
  • How it works: This credit can be applied to your federal income taxes, reducing the amount owed on those taxes by the amount of the credit. However, the credit is nonrefundable, meaning you can’t get back more on the credit than you owe in taxes and you can’t apply any excess credit to future tax years.
  • Eligible EVs: New EVs or plug-in EVs manufactured in the United States and costing less than $55,000 for a car and $80,000 for an SUV, van or truck
  • More information: https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after 
Federal Used Clean Vehicle Credit
  • How much? 30% of the sale price up to a maximum credit of $4,000
  • Eligible Coloradoans: Individuals buying the vehicle for use and not for resale
    • Modified adjusted gross income (AGI) may not exceed:
      • $150,000 for married filing jointly or a surviving spouse
      • $112,500 for heads of households
      • $75,000 for all other filers
  • How it works: This credit can be applied to your federal income taxes, reducing the amount owed on those taxes by the amount of the credit. However, the credit is nonrefundable, meaning you can’t get back more on the credit than you owe in taxes and you can’t apply any excess credit to future tax years.
  • Eligible EVs: Used EVs or plug-in EVs with a sale price of $25,000 or less. Sale prices includes all dealer-imposed costs or fees not required by law but doesn’t include costs or fees required by law, such as taxes or title and registration fees.
  • More information: https://www.irs.gov/credits-deductions/used-clean-vehicle-credit
Colorado State EV Tax Credit

(Innovative Motor Vehicle Tax Credit)

  • How much? Up to $7,500:
    • $5,000 for EVs or plug-in hybrid vehicles that cost less than $80,000 MSRP
    • An additional $2,500 for models that cost less than $35,000 MSRP
  • How it works: Refundable, so buyers can get the full benefit even if they don’t pay that much in state income taxes;
    • Buyers can get the credit upfront from dealers, who then file the paperwork and get the credit at a later date
    • Can be used together with the federal EV tax credit
  • Eligible Coloradans: Any Colorado resident who purchases or leases an eligible vehicle
    • Vehicle must be titled and registered in CO
Vehicle Exchange (VXC) Colorado Program
  • How much? 
    • $4,000 (used EV) 
    • $6,000 (new EV) 
  • How it works: This is a point-of-sale rebate, meaning the dealer deducts the amount of the rebate from the total cost at the time of purchase 
    • Available at participating dealerships only (scroll to the very bottom of this website to see a complete list of participating dealers)
  • Eligible Coloradans: Those who make less than 80% of the area median income (around $69,000 for an individual or $100,000 for a family of four in the Denver metro area). 
  • Eligible cars and trucks: Operational gas- or diesel-powered vehicles that are at least 12 years old OR have failed an emissions test
  • How long? The program will continue to accept applications until funds are exhausted. 
  • More information: Vehicle Exchange Colorado (VXC) Program | Colorado Energy Office
Xcel Energy’s Electric Vehicle Rebate
  • How much? $5,500 for new EVs or $3,000 for used EVs
    • Can be used for buying or leasing 
  • How it works: Consumers can fill out a “Before you shop” application with Xcel and get pre-qualified prior to purchasing a vehicle, which allows for an instant rebate at the point of purchase. For those who buy an EV first and then submit the EV Rebate application afterwards, the rebate will come in the form of a check 6-8 weeks later. 
    • CANNOT be used together with the CO state EV tax credit (meaning consumers need to pick one to use, but not both)
    • CAN be used alongside the CO Vehicle Exchange Program
  • Eligible Coloradans: The rebate is open to income-qualified residents; this includes households with incomes less than 80% of the area median income or 60% of the state median income as well as residents enrolled in programs such as LEAP, CARE, SNAP, or TANF.
    • Have an electric service account with Xcel Energy in Colorado
  • Eligible EVs: Any new or used plug-in electric vehicle (battery electric or plug-in hybrid electric) with an MSRP $50,000 or less from any Colorado-based dealer
Xcel’s Energy’s Electric Charging Station Rebate
  • How much: $500 for eligible Xcel customers or $1,300 for income-qualified customers
  • How it works: Rebates can help reduce the costs of updating your home’s wiring as well as offset the cost of a Level 2 charger
  • Eligible Coloradans: 
    • Drive an electric vehicle (all-electric or plug-in hybrid)
    • Live in a residence that receives electric service from Xcel Energy in Colorado
    • Agree to charge during an off-peak schedule through Xcel’s  Optimize Your Charge Program

 

Electric Vehicle Charging Station Tax Exemption

How does this all work? Here are a few examples of how these incentives can work together (note that programs have different eligibility requirements and should be independently verified for each individual):

I’m buying a new Chevy Bolt EUV that costs $55,000. I live in the Denver metro area and make $65,000 a year. What am I eligible for?

Likely Eligible:

  • Federal tax credit $7,500
    • The Chevy Bolt EUV is a model that qualifies for the federal credit (see a complete list here under “search for eligible vehicles”)
    • The buyer is eligible because they earn $65,000 per year (the cut off for individuals to qualify is $150,000)
  • Colorado state EV tax credit $5,000
    • Chevy Bolt EUV qualifies at $55,000 (the cut off is $80,000 MSRP)
    • No income eligibility for the buyer
  • Xcel’s Electric Charging Station Rebate – $1,300 (Xcel customers only)
    • This is a $500 rebate for all Xcel customers and $1,300 for income-qualified customers. To be considered income-qualified an individual/household must earn less than 80% of the area mean income, which in the Denver metro area is around $69,000. Earning $65,000 per year would likely qualify this indivdual for the higher rebate of $1,300. 
  • Electric Vehicle Charging Station Tax Exemption
  • Estimated total = $13,800

Not eligible:

  • Xcel Energy’s Electric Vehicle Rebate
    • The cut off for this rebate is $50,000 or less MSRP; the Chevy Bolt is $55,000 MSRP and therefore does not qualify
    • Note that even if this vehicle did qualify by price, the buyer would have to choose between this rebate and the CO state EV credit (they cannot use both)

I’m buying a used 2018 Nissan Leaf for $18,000. I earn around $35,000 per year in the Denver metro area. What am I eligible for?

Likely Eligible:

  • Federal Used Clean Vehicle Credit – $4,000
    • Used EVs must cost less than $25,000 and be at least 2 model years old, so this car would qualify on both price and age
    • Earning $35,000, the buyer meets the income-qualified standards, which limits gross adjustable income to $75,000 for individuals
    • The credit is worth 30% of the vehicle up to $4,000; since 30% of this vehicle is greater than $4,000, the buyer would receive the maximum credit of $4,000
  • Xcel Energy’s Electric Vehicle Rebate – $3,000 (Xcel customers only)
    • The cut off for this rebate is $50,000 or less MSRP and is also available for used EVs, so an $18,000 used Nissan Leaf meets these criteria
    • The credit is $3,000 for used cars (up to $5,500 for new cars)
    • The rebate is open to income-qualified residents; this includes individuals/households with incomes less than 80% of the area mean income, which in the Denver metro area is around $69,000. Earning $35,000 per year, this individual would be income-qualified. 
  • Xcel’s Electric Charging Station Rebate – $1,300 (Xcel customers only)
    • This is a $500 rebate for all Xcel customers and $1,300 for income-qualified customers. To be considered income-qualified an individual/household must earn less than 80% of the area mean income, which in the Denver metro area is around $69,000. Earning $35,000 per year, this individual would qualify for the higher rebate of $1,300. 
  • Electric Vehicle Charging Station Tax Exemption
  • Estimated total = $8,300

Not eligible:

  • Federal tax credit $7,500
    • This credit is only available for new EVs, used EVs do not qualify
  • Colorado state EV tax credit $5,000
    • This credit is also only for new EVs
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Alexandra Simon

Former Public Health Advocate, CoPIRG Foundation

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