For income tax years beginning on or after January 1, 2024, but before January 1, 2033, Colorado allows an income tax credit to incentivize the purchase of electric bicycles. The credit is allowed to qualified retailers for all retail sales of new, qualified electric bicycles sold in Colorado during the retailer’s income tax year to a qualified purchaser. The qualified retailer may claim an income tax credit to $500 for each retail sale of a new qualified electric bicycle sold to a Colorado resident. For the income tax year commencing on January 1, 2024, the credit is allowed only for retail sales made on or after April 1, 2024, but on or before December 31, 2024.
To be eligible to claim this credit, the criteria that must be met includes, but is not limited to:
1. A retailer must be a “qualified retailer” by satisfying the following criteria:
- They must sell qualified electric bicycles;
- They must hold a current Colorado sales tax license;
- They must have timely filed monthly Colorado sales tax returns showing a tax liability for at least 12 months;
- They must have paid the taxes due on the monthly Colorado sales tax return; and
- They must register with the Department via the retailer’s Revenue Online account.
2. A retailer must register with the Department. If the retailer is an affiliated corporation included in a combined or consolidated return, the registration must be made under the account for the parent corporation. If the retailer is a partnership or S corporation, the registration must be made under the account for the partnership of S corporation. To register:
- Go to Revenue Online and log in to the account that will file the income tax return for the qualified retailer.
- From the “Accounts” tab on the homepage, scroll down to your Income tax account type (e.g., COR, PAR, or IND).
- From the Income tax account type box, select the “Additional Actions” link and click on the “Submit Electric Powered Lawn Equipment and Electric Bicycle Registration” under the “Submit Credit Registration” box.
- You may register for either or both the electric bicycle credit and the electric lawn equipment credit by selecting the corresponding box or boxes for which you wish to register.
- After you submit the registration form, registrants will receive a confirmation code to keep for their records.
- Once the registration is processed, you will receive an approval or denial letter from the Department.
3. A qualified retailer must make retail sales in Colorado of new, qualified electric bicycles. A qualified electric bicycle means a new electric bicycle that has 2 or 3 wheels, fully operable pedals, an electric motor not exceeding 750 watts of power, and comply with any applicable standards developed by the Colorado Energy Office and posted on their website.
4. A retail sale must be made to a “qualified purchaser.” A qualified purchaser is a person who is a resident of Colorado and who has not previously purchased a qualified electric bicycle that was discounted by a qualified retailer claiming this credit in the same calendar year.
5. A qualified retailer must, at the time of the retail sale, collect from each qualified purchaser either a completed DR 0514 or complete the required fields on the spreadsheet.
6. A qualified retailer must provide to the qualified purchaser at the time of the retail sale of a new qualified electric bicycle a discount on the purchase price equal to the lessor of $450 or the purchase price of the qualified electric bicycle. A qualified retailer must show the discount as a separate line item on the invoice or receipt provided to the qualified purchaser.
7. A qualified retailer must submit quarterly reports in Revenue Online and file a Colorado income tax return. See “How do I claim the electric bicycle credit” FAQ below for information on how to file a quarterly report and what information you will need to file.
8. A qualified retailer cannot begin offering the discount and accounting for the credit until their income tax year begins on or after January 1, 2024; except that the credit is only allowed for retail sales made on or after April 1, 2024.
Electric Bicycle Tax Credit FAQ's
To claim the electric bicycle credit, a retailer must submit quarterly reports in Revenue Online and file a Colorado income tax return.
Quarterly Reports
After the Department approves the registration of a retailer as a qualified retailer, the A qualified retailer will be granted access to electronically submit quarterly reports through their Revenue Online account. If the qualified retailer is an affiliated corporation included in a combined or consolidated return, the parent corporation must file the quarterly reports through their own Revenue Online account. To submit quarterly reports, log in to the qualified retailer’s Revenue Online account. From the “Account” tab on the homepage, scroll down to your income tax account type (e.g., COR, PAR, or IND). From the income tax account type box, select to the “Additional Actions” link and under the “Submit Credit Records” box, select "Submit Electric Bicycle Tax Credit Records." The quarterly reports require the qualified retailer to collect and input:
- The number of new qualified electric bicycles sold in Colorado during the reporting period for which the required discount was provided; and
- Submit all affidavits collected from qualified purchasers during the reporting period.
The quarterly report contains a row for each month of the reporting period and a row to account for returned goods. The qualified retailer must report the required information for each month of the reporting period on the corresponding row. For example, if the electronic report is filed for the first quarter of the qualified retailer’s calendar tax year, January is month 1, February is month 2, and March is month 3.
The due date for quarterly reports coincides with the qualified retailer’s due dates for estimated tax payments. As a result, not every quarterly report will include three months of sales. For example, the first quarterly report for a calendar year filer will generally include qualifying sales made in January, February, and March, but the quarterly report filed for the second quarter will generally include qualifying sales from only April and May.
If the qualified retailer fails to include any qualifying sale in the appropriate quarterly report, the qualified retailer may include that sale in the report they file for a subsequent quarter. If a qualifying sale was not included in any quarterly report for the tax year in which the sale was made, the qualified retailer can include that sale in the quarterly report they file for the first quarter of the next tax year. For example, if the qualified retailer is a C corporation that is a calendar year filer, and its last quarterly report is due December 15th, the qualified retailer can include the December sales that occurred after December 15th in the report for the first quarter of the following year, due on April 15th.
Income Tax Return
A qualified retailer must file a Colorado income tax return to claim the credit for any qualified electric bicycles sold in Colorado during the qualified retailer’s income tax year. The qualified retailer must input the number of new qualified electric bicycles sold in Colorado during the qualified retailer’s income tax year on their income tax return. If the qualified retailer is an affiliated corporation included in a combined or consolidated return, the parent corporation must claim the credit on its Colorado income tax return. If the qualified retailer is a partnership or S corporation, the partnership or S corporation must issue a Colorado K-1 (DR 0106K) to each partner or shareholder showing their share of the credit. Each partner or shareholder must claim their share of the credit on their Colorado income tax return.
The credits may be claimed only on the Colorado income tax return filed for the tax year in which the lawn equipment was sold. Any unreported sales, errors, or discrepancies may be reconciled on the income tax filing.
Sales tax must be calculated on the total purchase price of a qualified electric bicycle sold before the qualified retailer provides the discount required to claim the credit.
However, if a qualified retailer offers a store coupon or discount in excess of the discount required to be provided to the purchaser to qualify for the credit, such coupon or additional discount does reduce the purchase price on which sales tax is calculated because there is no reimbursement to the retailer for the reduction. As such, sales tax must be calculated on the couponed or discounted purchase price of the item in excess of the discount required to qualify for the credit. These types of discounts will also reduce the purchase price on which the credit is calculated.
Although credits may not be claimed before a qualified retailer files their Colorado income tax return, a qualified retailer may take any allowable credits into account in calculating their required estimated payments for their tax year. Any allowable credits reduce the qualified retailer’s tax liability for the tax year in which the new qualified electric bicycles are sold and thereby reduce the amount of the required estimated payments.
No, there is no minimum or maximum retail price of electric bicycles that qualify for the credit. However, the electric bicycle must be an eligible electric bicycle as set forth on the Colorado Energy Office’s website in order to qualify for the credit.
As long as the receipt clearly differentiates or indicates the discount, the naming convention you choose can be somewhat flexible.
This credit cannot be applied to any sales tax liability. The credit is an income tax credit so it can be applied to only an income tax liability. For tax year 2024, qualified retailers are unable to claim the credits until they file their Colorado income tax return in 2025. The credits will first be applied to any income tax liability of the qualified retailer and the remainder will be refunded.
Although the credits may not be claimed before a qualified retailer files their Colorado income tax return, a qualified retailer may take any allowable credits into account in calculating their required estimated payments for their tax year. Any allowable credits reduce the qualified retailer’s tax liability for the tax year in which the new qualified electric bicycles are sold and thereby reduce the amount of the required estimated payments.
Additionally, starting in 2025, qualified retailers may elect to receive advance payments of the income tax credits. Additional information on this process will be posted on the Colorado Department of Revenue’s website in early 2025.
Yes, if a qualified retailer does not have an income tax liability due, the total amount of the credits will be fully refunded to the qualified retailer after they file their Colorado income tax return. If a qualified retailer does have an income tax liability, then the credits will first be applied to any income tax liability and the remainder will be refunded to the qualified retailer after they file their Colorado income tax return.
The answer depends on how each store or shop files their income tax returns. The person or entity that files the income tax return for the qualified retailer must be the entity to register with the Department. If, for example, a store or shop is a subsidiary and the parent entity files the income tax return of the store or shop, then only the parent entity may apply as the qualified retailer and in the registration, application must list the corresponding CANs (Colorado account numbers) for each store that will sell new qualified electric bicycles for which the parent intends or could claim this credit. However, if each store files its own income tax return, the store or shop must register as a qualified retailer.
A requirement to obtain the credit is that a qualified retailer must collect from a purchaser an affidavit affirming that the purchaser is a Colorado resident who has not previously purchased a new qualified electric bicycle that was discounted by a qualified retailer in the same calendar year. At the time of the purchase or before, a qualified retailer must review the documentation the purchaser provides in accordance with the instructions on the DR 0514 and ensure that the appropriate box on the form is checked or listed on the excel spreadsheet that corresponds with the document they reviewed.
Specifically, if a purchaser completes the Colorado driver license or Colorado identification card box on the form, the retailer must verify that the Colorado driver license or Colorado identification card is not expired.
Alternatively, if a purchaser is unable to provide a current, unexpired Colorado driver license or Colorado identification card, the purchaser must provide the retailer with one of the alternative proof of residency documents listed on either the DR 0514, Qualified Purchaser of an Electric Bicycle Affidavit, or the DR 0514 excel spreadsheet. The retailer must review the alternative proof of residency document to verify that it is dated within 3 months from the date of the purchase of the new qualified electric bicycle. If the document is older than 3 months from the date of the purchase of the new qualified electric bicycle, the retailer cannot provide the discount to the purchaser or claim the income tax credit for the retail sale. The retailer shall return the document to the purchaser after reviewing it. The retailer does not need to retain a copy of the document for their records.
Retailers should not keep a copy of the documentation they reviewed to verify a purchaser is a Colorado resident for their records.