From July 2023-January 2025 the tax credit provided to Colorado residents who purchased EVs started at $2,000 and gradually peaked over $4,000. Starting in January of 2025 that $4,000+ tax credit is set to gradually decline. Despite the decline in tax credits for purchasing qualifying vehicles, Colorado still offers a variety of incentives for EV buyers.
What Is Changing About the Colorado EV Tax Credit?
Starting in July 2023, the amount of tax credit offered to Colorado residents purchasing EVs was increased from $2,000 to over $4,000 gradually through 2025. This major change offered a huge incentive to buy an EV for your next vehicle.
It’s important to note that the increase didn’t last forever. The incentive is set to decrease to $3,500 starting in January 2025. The incentive will continue to decrease incrementally from that point onward until only $500 in 2028. Take advantage of the high tax credit rate now before it gradually declines.
How Does the EV Tax Credit Work?
If you make a qualifying purchase of a new EV, you can claim the EV tax credit when filing your taxes that year. This helps to reduce your tax burden, saving you money that can be allocated to other areas of your budget.
In addition to the Colorado state government’s tax credit, drivers are also eligible for a $7,500 tax credit through the federal government for new EV purchases. You could reduce your tax burden by as much as $12,500 between the state and federal tax credits.
What Other Benefits are Available to Colorado Residents?
Tax credits when purchasing a new vehicle in Colorado were not the only incentives that the state offered to EV buyers. Colorado offers a 30% credit for the cost of installation for EV charging stations. The Vehicle Exchange Committee (VXC) program helps people replace their old high carbon emitting cars with more environmentally sustainable options like EVs and Hybrids.
Are There Any Restrictions on the EV Tax Credit?
This tax credit is available to people paying taxes in the state of Colorado. There are also limitations on the MSRP of the electric vehicle that you purchase. To qualify for the tax credit requirements, your purchase must not exceed $55,000 for cars or $80,000 for SUVs.
What Is the Reason for the EV Tax Credit?
Tax credits for EVs are intended to incentivize the purchase of this class of vehicles. Because EVs are more environmentally friendly, the government wants to encourage drivers to purchase them as part of reducing our national carbon footprint. There are a number of other environmental benefits of EVs as well, including improving air quality and reducing noise pollution and the huge savings you’ll earn on fuel costs.
Interested in checking out our Volkswagen electric cars for sale in Greeley, CO? When you meet our team, we can give you more information about the EV tax credit and the outstanding electric vehicles in our inventory. Come to Greeley Volkswagen today and learn everything you need to know about electric vehicles.
Connect with us
