Ranking among the top ten states for renewable energy and EV adoption, the Mile High State has been encouraging its taxpayers to consider EVs as a viable alternative to fossil fuel since the early 2000s. In 2009, the second year of Tesla’s sale of the original Roadster, it was even possible to get as much as $42,000 off the price of a new EV for residents in Colorado who took advantage of Colorado EV incentives.

While you definitely can’t manage $42,000 off of a new Tesla in Colorado today, the state does have an EV tax credit that’s open to most EV makes and models. In today’s blog post, we’ll take a look at the Colorado EV tax credit, the Colorado Xcel Energy rebate, and a bonus alternative to credits and rebates to save on your next EV.

Colorado’s EV Tax Credit and Incentives

Before we begin, we’d just like to note that this article is for informational purposes only. We’re EV experts, not lawyers or tax advisors. What we’ve written here is not intended to provide tax, legal, financial, or accounting advice. Please consult your own financial and legal advisors before making transactional decisions.

The Colorado EV tax credit program is officially known as the Innovative Motor Vehicle and Innovative Truck Credit. This program allows for diminishing amounts of credits to be applied over time. For the 2022 tax year, the credit is worth $2,500 ($3,500 for light duty electric trucks) for new EVs. In 2023, that number reduced to $2000 ($3,000 for light trucks). Last year’s leased EVs are eligible for a $2000 credit for the 2022 tax year ($2,500 for light duty electric trucks), with that amount reduced to $1,500 ($2,000 for light duty electric trucks) in 2023.

Note: Colorado’s current Governor (Polis) is pushing for an amendment to the tax credit program that would increase the ev credit from $2000 to $5000 in 2023-2024, but nothing is final yet. We’ll keep you posted! 

The Colorado EV credit is also available for leases of EV light duty vehicles and trucks. For 2022 taxes, the credit for a qualifying EV lease is $1,500 for electric cars and $1,750 for electric trucks. There should be no change in the lease-qualified value of the credit from 2022-2026.

How Do You Qualify for Colorado’s EV Tax Credit?

So how do you qualify for the Colorado EV Credit? First off, unlike EV rebates in California, you do not have to be a permanent resident in the state of Colorado to qualify for the EV tax credit there, but you do have to be a Colorado taxpayer. The reason is fairly self-explanatory: tax credits only apply to those filing taxes. For example, if you live part time in another state but work and pay income tax in Colorado, you can qualify for the EV tax credit provided you garage and register your vehicle in Colorado (not all that uncommon for folks who keep a vehicle at a second residence).

Colorado tax law is much less restrictive regarding who qualifies for the credit than the Federal EV Tax credit laws allow. Currently, there is no income cap for the Colorado EV credit. There also doesn’t seem to be a limit of how many credits you can claim; the credit is available for each new EV purchased.

How Does the Colorado EV Credit Work?

Unlike the non-refundable Federal Clean Vehicle Credit, Colorado’s tax credit is refundable. This means that if the credit exceeds the amount of taxes you owe, the difference should be sent to you by check from the state revenue office. For example, if you owe only $1000 in taxes for 2023 and buy a qualifying EV this year, you might receive a check for $1000 (or less from 2024-2026).

If more than one person purchases the EV, they must determine how to divvy up the Colorado EV credit, and only one credit will apply per car no matter how many buyers are on the title.

To get the Colorado EV tax credit, you’d need to provide a copy of your purchase agreement and fill out Form DR 0617 when you file your taxes with the state of Colorado. These documents would be necessary for each EV you claim on your return.

Dealerships and financing institutions can apply your credit directly and transfer the credit to themselves if you prefer to receive your credit up front. Obviously, these would have to be dealerships doing business in Colorado, as they would also need to be able to file taxes in the state to claim Colorado’s EV credit.

Finally, if the EV credit is being sought for the lease of a vehicle being registered and titled in Colorado, the lease contract must be for at least two years. However, there are no penalties involving the credit (such as the return of the credit money) in the case of an early release from the lease agreement.

Which EVs Qualify for the Colorado Tax Credit?

The Colorado EV credit applies to new EVs only. Currently, there is no Colorado EV tax credit for used EVs (see the next section for a possible rebate for used EVs in the state).

While there is no purchase price limitation on EVs in order to qualify for the Colorado credit, there are a few restrictions on what can actually be considered an EV:

  • Must have a max speed over 55mph
  • Must have a battery capacity over 4kWh (not for e-bikes)
  • Cannot have three or fewer wheels in contact with the ground (sorry, EV motorcycle enthusiasts)

This leaves EVs from nearly all electric vehicle manufacturers eligible for the Colorado EV credit. Even Teslas, though they’ve been barred from many tax credits and rebates thanks to exceeding pricing and manufacturing thresholds in the Federal Tax Credit law and in various state laws, should still be eligible for the EV tax breaks in Colorado until 2026.

Xcel Energy (Colorado) Income Qualified Electric Vehicle Rebate

Another incentive for EV buyers in Colorado is a rebate from Xcel Energy for qualifying EVs. The rebate has more restrictions than Colorado’s tax credit; for one thing, only utility customers of Xcel Energy in Colorado are eligible.

There are strict income requirements regarding who is eligible for EV rebates in Colorado. However, the Xcel EV rebate does apply to used EV as well as new, which is especially helpful when you are working with a tight budget. For more information on which assistance programs and income brackets qualify, see Xcel’s EV rebate page for Colorado.

Xcel does have participating dealerships in the program that can give you an instant rebate if you qualify, but if you buy an EV outside of their EV dealer network, you can still submit your application. If you are approved, the rebate may take a little longer (up to 8 weeks in some cases), but it is still a great money saving option.

If you are a customer of Xcel and want to buy a used EV that could qualify for their Colorado EV rebate in 2023, you can use the handy filter on our listings to see which vehicles are selling near your zip code in Colorado and are sold by a dealership (select Seller Type – > Dealer in our filtering options). A word of caution, make sure to do your research on each dealership and consult your financial advisor to make sure you’ve understood the terms and limits of the rebate before entering any agreements with a seller.

Another Way to Save on EVs in Colorado

If you’re hoping to score a deal on an EV, relying on federal and state rebates to bring down the cost of a new EV in Colorado isn’t the only option. Why not consider buying a used EV? Many used EVs on the market are fairly-priced even without state and federal financial assistance.

Our Ultimate EV Marketplace has a huge selection of EV listings that are ready to go today. From used Ford F-150 Lightnings to a used Tesla Model Y, we’ve got EVs to fit your lifestyle and budget.

Find My Electric’s uncluttered used EV listings will get you to the vehicle you’re looking for fast, with no distractions or ICE vehicles to slow you down. Check out our listings to find your next electric ride today!