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Electric vehicle tax credits, discounts, and rebates in Colorado

Electric vehicles


Updated

onurdongel via istockphoto.com | Used by permission
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

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 2025, 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. 3, 2025):

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 from a licensed dealer, 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, purchased from a licensed dealer. 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 $6,000:
    • $3,500 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’s Energy’s Electric Charging Station Rebate
  • How much: $500 for eligible Xcel customers or up to $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 Blazer EV 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 Blazer EV 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 $3,500
    • Chevy Blazer EV 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 = $12,300


I’m buying a used 2019 Nissan Leaf for $15,000 from a dealership. 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 should 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’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 should qualify for the higher rebate of $1,300. 
  • Electric Vehicle Charging Station Tax Exemption
  • Estimated total = $5,300

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
Topics
Authors

Alexandra Simon

Former Public Health Advocate, CoPIRG Foundation

Kirsten Schatz

Clean Air Advocate, CoPIRG Foundation

Kirsten joined CoPIRG's staff in 2022 and is focused on fighting for clean air for Coloradans and transforming transportation systems. Previously, she oversaw The Public Interest Network's efforts to engage alumni/former employees and volunteers in the network's work, specializing in communications and organizing events in dozens of cities. Kirsten lives in the Denver area with her husband and two children, where she is an avid hiker, biker, church choir member and gardener.

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