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Electric Vehicle Tax Benefits


photos of electric vehicle charging station and electric vehicle plugged in to charge

State Tax Benefits

Tax credits are available in Colorado for the purchase or lease of new electric vehicles and plug-in hybrid electric vehicles. 

Effective July 1, 2023, the innovative motor vehicle credit increases to $5,000 for the purchase or lease of a qualifying electric or plug-in hybrid electric vehicle. This increase does not apply to the innovative truck credit, which will increase for tax years beginning on or after January 1, 2024. For additional information about changes made by House Bill 23-1272, please visit the Innovative Motor Vehicle and Innovative Truck Credits webpage(s).

For additional information, please see Department publications Income Tax Topics: Innovative Motor Vehicle Credit and Income Tax Topics: Innovative Truck Credit in the income tax guidance library.

Questions about the Colorado Electric Vehicle Tax Credit? Contact us at 303-238-7378.

Form DR 0617 - Innovative Motor Vehicle Credit & Innovative Truck Credit

Federal Tax Benefits

If you place in service a new plug-in electric vehicle (EV) or fuel cell vehicle (FCV) in 2023 or after, you may qualify for a clean vehicle tax credit. Federal and State (Colorado) Tax Credits are separate

You may qualify for a federal credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or FCV. The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032. Additional information is available on the IRS Website.

Find more information on federal credits for: used clean vehicles, qualified commercial clean vehicles, and new plug-in- EVs purchased before 2023

For more information on clean vehicle credits and other energy-related credits and deductions visit the IRS Credits and Deductions Under the Inflation Reduction Act of 2022 webpage.


Vehicle Exchange Colorado (VXC) Program

Colorado's vehicle exchange program makes the upgrade to an EV more affordable.

The Vehicle Exchange Colorado (VXC) program helps income-qualified Coloradans recycle and replace their old or high-emitting vehicles with electric vehicles (EVs). The VXC rebate will partially cover the upfront cost of the EV at the time of purchase or lease from an authorized automobile dealer. 

The Colorado Energy Office anticipates that the rebate program will launch in August 2023

Check the Vehicle Exchange Colorado (VXC) website in the coming months for more information and updates.