While gas-fueled cars are useful and relatively affordable, they are not good for the environment because of the carbon emissions they make. Unfortunately, electric vehicles (or EV’s) tend to be expensive and not something the average person would buy. For this reason, states like California and now Colorado have introduced tax credits to make electric vehicles more affordable with the intention of getting more people to buy them. And when that happens, it will mean less carbon emissions which combats air pollution but also the climate change that’s negatively affecting our planet. So here’s a simple rundown of what the state tax credits are and their required qualifications.
What are the Benefits?
Officially known as the Innovative Motor Vehicle and Innovative Truck Credit according to Find My Electric ’s website, this state tax credit was worth $2,500 for electric vehicles and “$3,500 for light duty electric trucks” in 2022. This year, the state tax credit amount has been reduced to $2,000 and $3,000 for electric vehicles and trucks respectively. Now last month, Colorado Governor Jared Polis announced a plan to amend the current budget so that it “would expand the state tax credit for electric vehicles from $2,000 to $5,000” says Colorado Public Radio. But until that gets solidified, the reduced tax credit amounts are definite.
How to Qualify
Which EV’s Count?
Though electric vehicle is a general term for any form of transportation that is powered by electricity instead of gas, only some will be covered by the state tax credit. Find My Electric states the vehicles that qualify “Must have a max speed over 55mph,” “have a battery capacity over 4kWh,” and “Cannot have three or fewer wheels in contact with the ground”. So what this means is e-bikes and electric-powered motorcycles aren’t covered. Plus, this credit only applies to new vehicles and not used ones.
What Needs to Be Done
If an electric vehicle is purchased this year that does meet the qualifications listed above, the vehicle’s purchase agreement has to be added to the DR 0617 form that’s filled out during tax season in April. Because while it’s not necessary for someone to be a Colorado resident to receive the tax credit, they do have to pay taxes in the Colorado State to qualify. Now for those who want the state tax credit paid up front, there are dealerships and financing institutions that can transfer the credit for you.
Alternatives
Depending on the amount of taxes paid for 2023 in relation to the state tax credit amount, it is possible for one to receive a paycheck with the difference amount between 2024 and 2026. There is also a rebate available for used electric vehicles purchased through Xcel Energy. Additionally, the city of Denver offers a rebate on e-bikes where its residents “can save up to $300 on the sale of an e‑bike or up to $500 on the sale of an e‑cargo bike” as said by Drive Electric Colorado ’s website.
For further questions on the state tax credit and rebates on electric vehicles, feel free to contact attorney Rick Wagner .