For income tax years beginning on or after January 1, 2024, but before January 1, 2027, Colorado allows an income tax credit to incentivize the purchase of electric-powered lawn equipment. The credit is allowed to qualified retailers for all retail sales of new, electric-powered lawn equipment sold in Colorado during the income tax year. The qualified retailer may claim an income tax credit equal to 33% of the aggregate purchase price of he qualifying lawn equipment and must provide the purchaser, at the time of the retail sale, a discount equal to 30% of the purchase price of the qualifying lawn equipment. The qualified retailer may retain an administrative fee not to exceed 3% of the purchase price of the new, electric-powered lawn equipment sold.
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 new, electric-powered lawn equipment;
- 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-powered lawn equipment credit and the electric bicycle 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, electric-powered lawn equipment, which means a:
- Lawn mower;
- Leaf Blower;
- Trimmer; or
- Snow Blower.
4. A qualified retailer must provide the purchaser at the time of the retail sale of new, electric-powered lawn equipment a discount equal to 30% of the aggregate purchase price, and show the discount as a separate line item on the invoice or receipt provided to the purchaser.
5. A qualified retailer must submit quarterly reports in Revenue Online and file a Colorado income tax return. See “How do I claim the electric-powered lawn equipment credit” FAQ below for information on how to submit a quarterly report and what information you will need.
6. 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.
Electric-Powered Lawn Equipment Tax Credit FAQ's
To claim the electric-powered lawn equipment credit, a qualified 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 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 “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 under the “Submit Credit Records” box, select “Submit Electric Powered Lawn Equipment Credit Records”. The quarterly reports require the qualified retailer to collect and input:
- The number of new, electric-powered lawn equipment sold per eligible category (lawn mower, leaf blower, trimmer, or snow blower) for which the discount was provided during each month of the reporting period; and
- The gross sales of new, electric-powered lawn equipment sold per eligible category (lawn mower, leaf blower, trimmer, or snow blower) for which the discount was provided during each month of the reporting period. Gross sales mean the aggregate purchase price of the new electric-powered lawn equipment sold before the qualified retailer provides the discount required to claim the credit.
Here is the template for Electric Powered Lawn Equipment Credit Submission.
For purposes of this credit, gross sales are the aggregate purchase price of all qualifying new, electric-powered lawn equipment sold for which the retailer provided the required discount to the purchaser. The gross sales included in the electronic report should be the aggregated purchase price of all qualifying equipment before reduction by the required discount. Each qualifying sale must be included in the first quarterly report due after the month in which the sale occurred.
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 the four quarterly reports filed by the retailer do not accurately reflect the correct number of qualifying sales made during the income tax year, the retailer must send a web message through their Revenue Online account to request any necessary correction to their quarterly reports.
Income Tax Return
A qualified retailer must file a Colorado income tax return to claim credits for any new, electric-powered lawn equipment sold in Colorado during the qualified retailer’s income tax year. 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. If the qualified retailer is a disregarded LLC, member or owner must claim the credit on its 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. If the four quarterly reports filed by the retailer do not accurately reflect the correct number of qualifying sales made during the income tax year, the retailer must send a web message through their Revenue Online account to request any necessary correction to their quarterly reports.
Sales tax must be calculated on the aggregate purchase price of the electric-powered lawn equipment 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.
There are no minimum or maximum pricing limitations on the electric-powered lawn equipment that may be sold and eligible for the credit
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, electric-powered lawn equipment is sold and thereby reduces the amount of the required estimated payments.