Powering The Rockies: The Colorado EV Tax Credit

Colorado is still relatively behind other states in attempting to increase electric vehicle uptake. However, they have recently started taking greater strides to accomplish environmental and economic goals regarding the novel technology.

At A Glance:

1️⃣ In 2022, the number of EVs sold in Colorado massively increased, amounting to a total of 21,826 EVs, representing an increase of 58% from 2021, and the state aims to have 940,000 plug-in hybrid electric vehicles on the road by 2030.

2️⃣ Colorado State offers attractive incentives for EV buyers and owners, ranging from tax credits (up to $4000) to rebates and even HOV lane access; furthermore, the state will incorporate EVs into its arsenal of assets (i.e., school buses, public transit, etc.).

3️⃣ While the state currently has more than 1,000 public EV charging stations, they plan to add more.

4️⃣ Colorado wants to promote equity by providing low-income consumers with an opportunity to afford EVs too.

With such attractive incentive schemes available, now is as good a time as any to get into EVs. So let’s dive deeper!

Overview Of The Colorado EV Tax Credit

In general, the incentives for promoting EV uptake in Colorado are limited to tax credits, rebates, and access to special lanes on the road.

However, the state also highlights state entities, businesses, and consumers’ responsibility to contribute positively to environmental issues.

Furthermore, one can differentiate between federal and state incentives, which you’d be glad to hear is cumulative!

Federal EV Tax Credits: Requirements And Benefits

Firstly, and most importantly, the federal EV tax credits apply to all parts of the US and differ between new and old EVs.

For new EVs bought after 2023, owners can receive up to $7,500 in tax credits, valid from 2023 to 2032.

New Electric Vehicles

Requirements for new EVs bought after 2023:

  • You must use the new EV primarily in the US.
  • It must be intended for personal or commercial use, not resale. 
  • The vehicle must have a battery capacity of at least 7KWh.
  • The gross vehicle must be less than 14,000
  • EVs must be made by a qualified manufacturer and undergo final assembly in North America.
  • You can find the list of eligible makers and models here.

Furthermore, buyers must have modified adjusted gross income (AGI) below these thresholds: 

  • $300,000 for married couples when filing jointly.
  • $225,000 for breadwinners.
  • $150,000 for others.

The credit amount is non-refundable; you are only eligible to receive an amount totaling your current tax liability, up to $7,500, given that you meet all the requirements.

The story for older and leased vehicles is a little different.

Used Electric Cars

Regarding new electric vehicles bought before 2023:

  • The previous requirements apply.
  • Additionally, the vehicle must be purchased from a manufacturer with less than 200,000 units sold at the time. 
  • The list of eligible vehicles can be found here.
  • Another key difference is regarding the kilowatt hours requirement.
  • For vehicles with at least 5 kWh, you may receive $2,917 and an additional $417 for every extra kWh above this amount. 

Finally, used electric cars are also eligible for a tax credit:

  • The credit is worth 30% of the sale price, up to a maximum of $4,000, since only purchases below $25,000 qualify.
  • You must be the user of the EV, and you may not claim two clean vehicle credits within 3 years.
  • The list of eligible used vehicles is different and can be found here.

Furthermore, buyers of used EVs need a modified adjusted gross income (AGI) below these thresholds: 

  • $150,000 for married couples when filing jointly.
  • $112,500 for breadwinners.
  • $75,000 for others.

📖 Read Next: How The Federal EV Tax Credit Can Benefit You

Colorado State EV Tax Credits

Eligible EVs registered in Colorado are entitled to an additional tax credit, given that it was purchased or leased before the start of 2026.

The following table summarizes the amounts that buyers can score from tax credits:

Vehicle Type2022 Purchase 2022 Lease2023-2025 Purchase2023-2025 Lease
Light-duty EV$2,500$1,500$2,000$1,500
Light-duty E-truck$3,500$1,750$2,800$1,750
Medium E-truck$5,000$2,500$4,000$2,500
Heavy E-truck$10,000$5,000$8,000$5,000

Colorado State EV And Charging Station Grants

Colorado plans to fund 80% of the costs of installing charging stations. The eligible applicants for the EV charging station grants include organizations such as local, state, and federal governments, public universities and transit agencies, private NPOs, corporations, landlords who own multi-unit dwellings, and local community agencies.

For more information regarding EV charging station installation grants, read the article below:

💡 Related Article: The Federal EV Charger Tax Credit

Other EV Incentives Unique To Colorado

Although there are many more incentives that the state of Colorado or local businesses have implemented, the most beneficial ones are listed below.

I recommend that you look up what seems most applicable to you or your business and try to combine as many incentives as possible to save:

  1. Gunnison County Electric Association (GCEA) EV Loan Program – GCEA members can borrow an EV for a day with no restrictions on mileage and without any cost.
  2. Black Hills Energy Non-Residential EV Time-Of-Use (TOU) Rate – Commercial customers operating EV charging stations can get TOU rates.
  3. GCEA EV Charging Station Rebate – Residential customers can get a 50% tax-back for purchasing and installing a Level 2 EV charging station for up to $1,250.
  4. Holy Cross Energy (HCE) Charging Station Incentive – Residential customers can get free or discounted EV charging stations.
  5. HCE EV Charging Station Rebate – Commercial customers can get a $600 rebate for installing an EV charging station for the workplace, multifamily housing, or fleet charging.

How To Take Advantage Of Colorado’s EV Incentives: 

The mColorado’sant step in taking advantage of both federal and state tax credits/rebates is Form 8936.

Usually, you must file this form along with your tax return, and you should get a discount on your subsequent tax.

However, some car companies, such as Tesla, must fill out the form for you, which may cause significant delays since many customers will request them immediately.

Regarding deadlines, to claim the federal credit, you only need to file Form 8936 at the time of your next tax return.

Regarding Colorado’s local credit, you can aColorado’se point of sale of the car or within 90 days of purchase. The federal tax credit is valid until 2032, while Colorado’s credit expires in 2026. Colorado’s 

Benefits Of Colorado’s EV Incentives

1️⃣ It boosts Colorado’s EV market, contributing to the economy.
2️⃣ It protects EV businesses with high startup costs from failure.
3️⃣ Consumers get higher utility at a lower cost.
4️⃣ Environmental benefits are ensured in the future.
5️⃣ Businesses benefit from upgrading entire fleets.

What Does The Colorado Electric Vehicle Sticker Do? 

The EV decals are used to distinguish electric vehicles from traditional fuel-powered cars. Furthermore, since EV owners must pay around $50 tax annually, officials can use it to identify EVs.

Key Takeaways

🔑 As EV sales rose by 58% in 2022, it can be seen that the incentives are working already.
🔑 Combining federal and local tax credits could save around $10,000.
🔑 Personal and commercial charging stations are becoming cheaper and more prevalent.
🔑 Low-income consumers are gaining increased access to EVs in the state.

Incentive Schemes By State:
Arizona’s EV Incentives
California’s EV Incentives & Rebates
Florida’s EV Incentives & Rebates
Illinois’ EV Incentives & Rebates
Indiana’s EV Incentives
Michigan’s EV Incentives
Nevada’s EV Incentives & Rebates
New York’s EV Incentives
North Carolina’s EV Incentives & Rebates
Ohio’s EV Incentives & Rebates
Texas’ EV Incentives
Utah’s EV Incentives
Virginia EV incentives
Washington State’s EV Incentives