Colorado Increases State EV Tax Credits to $5,000

Beginning this July, vehicle shoppers in Colorado will get a major incentive to buy an EV or hybrid, as the state is increasing its EV tax credits from the $2,000 current maximum up to $5,000. These incentives are available in addition to federal tax credits for those that meet the qualifications.

Earlier in May 2023, Colorado Gov. Jared Polis signed multiple climate-related bills, including added tax credits for new EV and hybrid vehicle purchases, as reported by Colorado Public Radio.

The current tax credits offer $2,000 for new EV purchases, or those who sign up for a new, two-year lease on an EV may be eligible for $1,500 tax credits. Starting July 1, the tax credits will increase to $5,000 for new EV purchases with an MSRP up to $80,000. There will be no credits available for vehicles over an $80,000 MSRP.

Additionally, new EV purchases with MSRP under $35,000 in Colorado will be eligible for an additional $2,500 state tax credit, starting in January 2024.

Those who want to get the most out of the available tax credits will need to do so by Jan. 1, 2025. Starting in 2025, the tax credits will gradually decline until 2029. The tax credits will decrease to $3,500 from Jan. 1, 2025 to 2026; then to $1,500 from 2026 to 2027; $1,000 from 2027 to 2028; and finally $500 from 2028 until 2029, according to the bill.

As Electrek reported, this deal will not be available for anyone purchasing an eligible vehicle in Colorado. Buyers will need to pay taxes in the state to receive the tax credits.

In addition to the state tax credits, some vehicle buyers could also be eligible for up to $7,500 in federal tax credits. Vehicles will need to meet the new requirements for federal EV tax credits, which include certain parts and minerals being made, extracted or recycled in North America. Vehicle MSRPs must be below $55,000 for cars or under $80,000 for SUVs, vans and pickup trucks, and buyers will need to meet certain income requirements to be eligible. The federal tax credits also offer incentives for used EV and hybrid vehicle purchases.

E-bikes will also be getting a boost in Colorado. Denver’s e-bike rebate program restarted in January 2023, which offers a standard rebate up to $300 for e-bikes or up to $500 for e-cargo bikes, as well as income-based rebates, which can save up to $1,200 for e-bikes or up to $1,400 for e-cargo bikes for those who meet income requirements. Colorado Public Radio reported the Colorado Energy Office has plans for a statewide program that will offer up to $450 for e-bikes in a standard rebate rolling out in spring 2024.