Colorado announced an expanded electric vehicle rebate program as the federal government axes the $7,500 tax credit.
If you did not seize the opportunity to sign for a new electric vehicle by September 30, you are no longer eligible to receive a federal tax credit on your purchase or lease. However, automakers and even states are stepping in to fill the gap — at least temporarily — with the State of Colorado announcing this week it would expand an electric vehicle rebate to $9,000 for new purchases and leases, and $6,000 for used purchases and leases, effective November 3.
The rebate is part of the “Vehicle Exchange Colorado” program, and within that name is the caveat if you’re a resident looking to make the jump to an EV. The program, per its mission statement, helps state residents “recycle and replace their old or high-emitting vehicles with EVs…The VXC rebate partially covers the upfront cost of the EV at the time of purchase or lease from an authorized automobile dealer.” So, you have to trade in an older gasoline or diesel vehicle to receive the rebate.
Colorado’s electric vehicle tax credit does still exist if you don’t have an old ICE vehicle to trade. However, the $3,500 base credit drops to $750 on January 1, 2025 (though the $2,500 credit for “lower cost vehicles” will remain the same).
How do you qualify for the VXC rebate?
Apart from being a Colorado resident who’s 18 years or older, the exchange program has a few checks to offer the substantial rebate to prospective EV buyers. Internal combustion vehicles being traded through the program must be 12 years or older (so 2013, if you do it this year) or be a vehicle that fails a Colorado emissions test. Applicants must also have a clear title (so any kind of branded car won’t qualify) and make less than 80% of the area median income where you live in the state, or be enrolled in one of several income assistance programs (Section 8, Social Security Disability Insurance, Medicaid, etc.).
The VXC program also does not currently support trading an old electric vehicle or hybrid for a new or less used EV. Only passenger vehicles that are strictly gasoline or diesel-powered are eligible.
If you are interested in taking advantage of the higher rebate after November 3, you also need to conduct your transaction at one of 175 authorized dealers in Colorado. The rebate will be applied at the time of the transaction, however, so you get a substantial chunk of money off the price of a new or used EV. This rebate also stacks with the Colorado state EV tax credit, so you can save up to $12,500 through the end of 2025. If the vehicle’s MSRP is under $3,500, Coloradans also qualify for another $2,500 low cost tax credit.