Colorado’s Electric Vehicle Discounts: Big Savings Ahead
Colorado is upping the ante on electric vehicle (EV) incentives, potentially offering consumers substantial savings. It’s now possible for drivers to qualify for discounts totaling a whopping $21,000. When combined with an additional rebate from Xcel Energy, the state’s largest power provider, a person purchasing a new plug-in vehicle could save a remarkable $26,500.
This isn’t a typo; it reflects Colorado’s commitment to promoting EV adoption as part of its wider climate strategy. Colorado’s existing $5,000 tax credit is already the most generous state-level incentive. With more programs launching in the coming months, the state is set to test the full impact of these discounts, which are central to the plan to decrease carbon emissions. Governor Jared Polis is betting that these incentives will help the state reach its goal of getting nearly a million plug-in vehicles on the road by 2030. While the rebates and credits each have different requirements, it is technically possible to qualify for the full suite of them. CPR News is following a consumer through the car-buying process in early 2024 to report on the process.
Why So Many EV Incentives?
Governor Jared Polis has made electric vehicles a cornerstone of Colorado’s climate plans. The administration set a goal to have 940,000 light-duty electric vehicles on the road by 2030, a massive increase from the current 86,000 plug-in cars in Colorado. Meeting these targets requires a significant acceleration in electric vehicle purchases, aiming for 25% of overall car sales by 2025. In contrast to California’s plan to ban gasoline car sales by 2035, Colorado is choosing a more encouraging approach, investing in chargers and generous purchase incentives.
Vehicle Exchange Program Details
The Vehicle Exchange Colorado program is set to launch soon. This initiative offers extra incentives to low- to medium-income residents. To participate, trade-in vehicles must have failed an emissions test or be at least 12 years old. Qualified buyers can receive a $6,000 discount on a new plug-in hybrid or electric vehicle, or $4,000 off a used one. More program details are available online.
Federal Rebate Considerations
Not all plug-in hybrid and electric cars qualify for the full $7,500 federal rebate. Factors such as domestic supply chain requirements are important. The IRS website provides a list of qualifying vehicles.
Tax Credit Combinations: What to Know
Understanding the difference between “refundable” and “non-refundable” tax credits is key. Colorado’s $5,000 tax credit and the additional $2,500 rebate are “refundable,” meaning you receive the full amount regardless of your state tax liability. The federal credit, however, is “non-refundable,” so you can only reduce your final tax bill and no more. Other programs, like Xcel Energy’s rebates and Colorado’s vehicle exchange credit, target lower-income buyers.
Combining Discounts: The Possibilities
Combining all these benefits is not yet possible. However, Xcel Energy is working to loosen the restrictions. Under a new electric vehicle plan submitted to state regulators, car buyers may be able to combine both incentives if they live in communities with elevated air pollution levels. Should this be approved it would likely take effect in 2024.
Point-of-Sale vs. Tax Filing
The timing of these discounts depends on the specific program. For the state and federal tax credits, car buyers must buy the vehicle first, then claim the discounts by filing forms with their taxes. Colorado aims to allow dealerships to offer the rebate as a point-of-sale discount starting in 2025. Xcel Energy and the vehicle exchange program will offer point-of-sale discounts.
