How the State of Colorado Rewards Electric Vehicle Buyers and Lessees
Most Coloradans wouldn’t pass up an opportunity to get or save as much as $5,000. It isn’t exactly chump change. That’s how much the State of Colorado is offering taxpayers if you purchase or lease a plug-in hybrid (PHEV) or battery electric vehicle (BEV). That’s in addition to up to $7,500 federal tax credit offered under the Inflation Reduction Act.
The Colorado Energy Office is making a push to clean up our air through the Vehicle Exchange Colorado (VXC) Program. Qualified Coloradans can receive up to $6,000 to trade in older and high-emitting vehicles towards the purchase of a new EV or PHEV. On top of that, the electric companies have thrown their hats in the ring. Xcel Energy and Black Hills Energy are incentivizing qualified Coloradans with up to a $5,500 rebate towards the purchase of a new EV or PHEV.
It’s all part of a push to get people out of dirtier greenhouse gas-emitting vehicles and into zero-emissions vehicles.
Colorado Tax Credit
Of course, terms and conditions apply – some in the “Duh!” category, but others less obvious. Here’s some top line info:
- Individual taxpayers, estates, trusts and C corporations may claim the credit on each PHEV or BEV they purchase/lease; partnerships or S corporation members may claim the credits.
- Vehicles must be new at purchase/lease and titled and registered in Colorado. Used vehicles are not eligible.
- Manufacturer’s suggested retail price (MSRP) can’t exceed $80,000.
- Lease agreements must initially be for at least two years and the credits go to lessees, not to lessors.
- Vehicles must weigh 8,500 lbs. or less, have four wheels and be able to go at least 55 mph.
- Vehicles must be powered “to a significant extent” by electric motors.
- Batteries must have a capacity of at least 4 kWh and be capable of being recharged from external power sources.
- Taxpayers who qualify for the credits and finance their PHEVs or BEVs can assign the credits at the time of purchase/lease to the financing entity; they won’t be able to subsequently claim the credits on their taxes. The financing entity can offer the buyers/lessees a cash payment, reduced price, reduced payments or other considerations.
Vehicle Exchange Colorado
The Vehicle Exchange Colorado (VXC) program helps income-qualified Coloradans recycle and replace their old or high-emitting vehicles with electric vehicles (EVs). The VXC rebate will partially cover the upfront cost of the EV at the time of purchase or lease from an authorized automobile dealer.
We encourage income-qualified Colorado residents who own eligible old or high-emitting vehicles to apply for this rebate.
All Schomp Automotive Colorado dealerships are participating in the Vehicle Exchange Program (VXC). Contact a client Advisor for complete details.
Energy Company Rebates
Xcel Energy and Black Hills Energy are offering some of their residential household customers rebates for buying or leasing pre-owned or new EVs.
- Qualifying households must have incomes below 80% of the area median income in the county where the resident lives.
- Qualifying households that are enrolled in a state financial assistance program such as the Low-Income Energy Assistance Program (LEAP) automatically qualify.
- Eligible EVs must be bought or leased from a Colorado auto dealership.
For more information, see the Xcel Energy EV Rebate website.
Colorado has actually made tax credits available for several years – the amounts have varied by year. And additional tax credits are coming for some vehicles beginning in January 2024 through December 2029. These credits are specifically targeted at vehicles with an MSRP under $35,000.
While the information outlined here provides the basics, it’s very important to do your own research and perhaps consult a tax expert – we are not offering tax advice. The rules, spelled out in (almost) clear language – it’s the government, after all – are spelled out in this publication. You could also take a look at Drive Electric Colorado for more information.