Electric Vehicle Income Tax Credit

Summary

The State of Colorado offers an income tax credit for the purchase or lease of an electric motor vehicle, a plug-in hybrid motor vehicle, or an original equipment manufacturer electric/plug-in hybrid electric truck. H.B. 1272 of 2023 extended the light-duty credit through the end of 2028, extended the truck credit through the end of 2032, changed the credit values throughout the years, and created a new electric bicycle credit available from 2024 through 2032.

EVs/PHEVs under 8,500 pounds

The innovative motor vehicles income tax credit for the purchase or lease of an EV or PHEV under 8,500 pounds is available through the end of 2028. Category 1 vehicles that exceed MSRP of $80,000 are not eligible for the credit. The credit is $2,000 for purchases and $1,500 for leases of cars before July 1, 2023; $5,000 for purchases or leases between July 1, 2023 and January 1, 2025; $3,500 for purchases or leases in 2025; $1,500 for purchases or leases in 2026; $1,000 for purchases or leases in 2027; and $500 for purchases or leases in 2028. In addition, in 2024 and 2025, an additional $600 can claimed if the purchaser assigns the tax credit to the financing entity or vehicle dealer. Starting in 2024, vehicles under $35,000 will be eligible for an additional $2,500. The credit would be halved if the state is not projected to exceed its fiscal year spending limit by 5%

EVs over 8,500 pounds and Electric Trucks

The innovative trucks tax credit is available through the end of 2032. The existing credit levels are shortened from the end of 2025 to the end of 2023. For light-duty passenger motor vehicles over 8,500 pounds and light-duty trucks, new credits are $5,000 for 2024, $3,500 for 2025, $1,500 for 2026, $1,000 for 2027, and $500 for 2028. For medium-duty trucks, new credits are $10,000 for 2024 through 2025, and $3,000 for 2026 through 2032. For heavy-duty trucks, new credits are $10,000 for 2024 and 2025, and $5,000 for 2026 through 2032. The credit would be halved if the state is not projected to exceed its fiscal year spending limit by 5%.

Electric Bicycles

The e-bike tax credit is available to qualified retailers who sell eligible bikes. The retailer will receive $500 for bikes sold at the purchase price or with a $400 discount, whichever is lower; the credit would be available in 2024 through the end of 2032. Purchasers can only receive the $400 discount if they are marked as a qualified purchaser, I.E. they are a Colorado resident and have not already bought a discounted bike in the same tax year. The credit would be halved if the state is not projected to exceed its fiscal year spending limit by 5%.