The U.S. Treasury’s decision Friday to let electric vehicle buyers take $7,500 in federal tax credits off the price at time of purchase next year will accelerate the EV revolution in Colorado and give more people access to the clean technology, state leaders said.
EV buyers currently have to wait until next year’s tax time to receive the big federal incentive created by the Inflation Reduction Act, keeping EV retail prices out of reach for some middle- and lower-income buyers. Previously, officials had also said buyers might not qualify for the full $7,500 in federal incentive unless they owed at least that much in federal taxes by the end of the year.
Now, Colorado buyers who qualify under federal income caps can get the full tax credit taken off the price at the dealership, in addition to $5,000 in an instant state credit and possible other incentives.
Used EV car buyers can qualify for $4,000 in instant federal credits. Dealers can start taking the credits off the purchase price Jan. 1.
“We applaud this move by the federal government,” Colorado Energy Office Executive Director Will Toor said. “Making incentives available at the time of purchase makes them far easier for consumers to use and will encourage even faster acceleration of EV adoption across the country.”
Colorado’s tax credit legislation from the 2023 session will allow dealers to make the state credit available at point of sale in January 2025, Toor said.
“If we large-scale EV sales, they must be affordable for average Americans. That takes the consumer, the government and the dealer,” said Matthew Groves, chief executive of the Colorado Automobile Dealers Association. “Today’s decision builds trust in the system for dealers who were wary about extending so much credit to the federal government. We are happy to see this decision, and hopeful that it ensures the tax credit works the way it was intended.”
Nationally, the League of Conservation Voters also praised the Treasury announcement.
“This is an exciting step toward making EVs more accessible,” said the league’s climate and clean energy government affairs advocate, Darien Davis.
To qualify for the federal tax credit, new cars can’t be priced over $55,000, and light trucks and SUVs at $80,000. Income caps for buyers are $150,000 for single buyers and $300,000 for those filing jointly. Used car prices are capped at $25,000 for the incentive.
Sales of ultra-low emissions fully electric vehicles and plug-in hybrid electric vehicles, which have both a gas engine and a battery system, have risen steadily in Colorado to between 15% to 20% of monthly new car sales, according to state officials.