If you’re considering the purchase of an EV, you may want to do it by the end of the year. State income tax credits for electric vehicles will drop significantly after Dec. 31.
The current $4,000 credit for the purchase of a qualifying electric or plug-in hybrid passenger vehicle will drop to $2,500 on Jan. 1 and remain there until 2023, at which point it will drop to $2,000. A lease credit, currently $2,000, will be $1,500 from 2021 to 2025.
Purchase of a light-duty electric or plug-in hybrid truck currently earns a $5,500 credit, but will drop to $3,500 in 2021. Credits for purchases of medium- and heavy-duty electric trucks, and leases for electric trucks, also drop significantly after Dec. 31.
Colorado’s EV tax credits are among the best in the U.S. Last year state lawmakers extended the credits, which should help meet the Colorado Electric Vehicle Plan’s goal of 940,000 EVs by 2030. More than 30,000 EVs are currently registered in Colorado, according to the state Energy Office.
Important things to remember if you are considering the purchase or lease of an EV:
• Colorado’s tax credit is based on the year in which you purchase or lease, not the year the vehicle was manufactured.
• The state tax credit is not allowed for the purchase or lease of a used vehicle.
• Federal tax credits up to $7,500 are available for many EVs. Visit www.fueleconomy.gov/feg/taxcenter.shtml for more info.
Additional details regarding state tax credits for EVs can be found in the Colorado Department of Revenue’s FYI Income 69 document, which is available by selecting Colorado Credits on our electric vehicles page.
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