Tax Credits and Electric Vehicles

Driving an electric vehicle is a good way to save money while reducing climate change pollution and other pollutants that harm our health. Tax credits are available to make an electric vehicle more affordable. Both the state and the federal government have tax credits that you can take advantage of when purchasing an electric vehicle. 

Colorado Electric Vehicle Tax Credit

• If you purchase a new electric vehicle by the end of 2020, you can get a $4,000 tax credit.
• If you purchase a new electric vehicle from 2021-2023, you can get a $2,500 tax credit.
• If you lease an electric vehicle for two years beginning before the end of 2020, you can get a $2,500 tax credit. 
• If you lease an electric vehicle for two years beginning from 2021-2023, you can get a $2,000 tax credit. 

You can claim the Colorado Electric Vehicle Tax Credit for yourself on your tax return or use it at the dealership to lower the sticker price of the vehicle you want to purchase. Make sure you ask the dealership about this option.

If you claim the Colorado Electric Vehicle Tax Credit for yourself, you need to file a Colorado income tax return, Form DR 0617 and a copy of the lease or purchase agreement.

Used electric vehicles do not qualify for the Colorado Electric Vehicle Tax Credit, but there are many used electric vehicles on the market that may be cheaper than new electric vehicles. You can find a used electric vehicle using sites like autotrader.com.

You can learn more about the Colorado Electric Vehicle Tax Credit at https://www.colorado.gov/pacific/sites/default/files/Income69.pdf

You should consult with your trusted tax professional before filing your tax return.

Federal Tax Credits for Electric Vehicles

• You can claim a federal tax credit for purchasing an electric vehicle of up to $7,500 depending on the make and model of the vehicle. 
• Each car manufacturer can sell 200,000 electric vehicles before this tax credit will phase out for that manufacturer. The only car manufacturers that have reached this mark are Tesla and General Motors (GM). 
• You can see which electric vehicles qualify for the federal tax credit and how much each vehicle qualifies for here https://www.fueleconomy.gov/feg/taxevb.shtml
• To claim this credit on your income tax return, you need to file a federal income tax return and Form 8936, which you can access here https://www.irs.gov/pub/irs-pdf/f8936.pdf

You should consult with your trusted tax professional before filing your tax return.