EV Incentives Explained

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Federal EV Tax Credit

The federal government currently offers two credits for electric vehicles:

  • Up to $7,500 for new EV purchases or leases
  • Up to $4,000 for used EVs

These credits can now be applied at the point of sale, making it easier to take advantage of the savings immediately rather than waiting until tax season.

Important Deadline:

Both credits are set to expire on September 30, 2025. To qualify, you must purchase or lease your EV and take delivery by that date.

This update follows new legislation passed on July 3, 2025, which moved up the original expiration timeline previously established by the Inflation Reduction Act.

Colorado Innovative Motor Vehicle Credit

Colorado offers an additional incentive for EV buyers and lessees, with benefits that vary based on vehicle price and financing options:

  • $3,500 for qualifying new battery electric or plug-in hybrid vehicles (MSRP of $80,000 or less)
  • Bonus $2,500 for vehicles with an MSRP of $35,000 or less
  • $3,850 total credit if financed through VWFS and assigned at point-of-sale

These credits may also be applied directly at the dealership.

⚠️ Note: The future of this state credit is pending review in the 2026 Colorado state budget. Updates are expected later in 2025.

🔁 Vehicle Exchange Colorado (VXC) Program

The VXC program is a Colorado state initiative aimed at helping income-qualified residents replace older, higher-emissions vehicles with newer, cleaner electric alternatives.

Who's Eligible?

  • Colorado residents age 18+ with a valid Colorado driver's license
  • Income must be at or below 80% of the Area Median Income (AMI), or enrollment in a qualifying assistance program (SNAP, SSI, Medicaid, etc.)
  • Vehicle being traded in must be at least 12 years old, gasoline/diesel-powered, titled in your name, and free of liens

Rebate Amounts:

  • $6,000 toward a new battery electric or plug-in hybrid vehicle
  • $4,000 toward a qualifying used EV

MSRP for new vehicles must be $80,000 or less; used vehicle purchase price must be $50,000 or less. Rebates are applied at the time of purchase and can be combined with federal and state credits.

How to Apply:

  • Register and apply through the Vehicle Exchange Colorado portal
  • Applications are reviewed in approximately 10 business days
  • Approved rebates must be redeemed at a participating dealership within 90 days

Summary of Incentives

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✅ What to Do Next

If you're considering an EV purchase or lease, now is a key time to act-especially with the federal credit ending in September 2025. For more information about how these programs work, eligibility requirements, or how to get started, we recommend visiting:

Have questions about applying your credits at the point of sale? Reach out to a qualified tax professional or consult the official program websites above.