New electric vehicle tax credit now in effect in Colorado
Colorado has a new state tax credit to incentivize the transition to electric vehicles.
The credit went into effect on July 1, 2023.
Shannon Young spoke with Carrie Atiyeh, Associate Director of Transportation Fuels and Technology at the Colorado Energy Office.
Shannon Young: This new tax credit went into effect at the start of this month, what exactly does it do?
Carrie Atiyeh: So the tax credit now for Colorado taxpayers is a $5,000 tax credit for the purchase or lease of a new electric vehicle.
In Colorado we have a really robust goal of having 940,000 electric vehicles on our roads by 2030, and so we want to make sure that we have the policies and the programs and the incentives in place to be able to incentivize and encourage Coloradans to make that switch to electric vehicles.
We also know that transportation is our largest source of greenhouse gas emissions in the state of Colorado, so as we are looking at all the different options and opportunities to be able to reduce greenhouse gas emissions in the state from all sectors, we know that transportation makes up a really significant part of that.
So this tax credit is in effect, as you said, beginning July 1st, 2023, for the purchase or lease of that new electric vehicle, and consumers can save $5,000 now on that purchase.
Shannon Young: And that's $5,000 at the state level, but can these be combined with a federal tax credit?
Carrie Atiyeh: There is also a federal tax credit available as well for electric vehicles up to $7,500.
There are some income requirements and some manufacturing requirements as well.
So, if a consumer is able to stack now the state tax credit of $5,000 and that federal tax credit of $7,500, that's up to $12,500 of savings.
Shannon Young: So these tax credits are for personal vehicles, are there any plans or programs already in place for transitioning fleets?
Carrie Atiyeh: There are, there are additional incentives available for fleets and for medium and heavy duty vehicles, including school buses.
So we are really looking at transportation across the board holistically in order to reduce emissions.
I'll also mention at the federal level, there is also now a used electric vehicle tax credit available of up to $4,000.
So while the $7,500 tax credit at the federal level is for new vehicles, and here in Colorado, that $5,000 is available for new EVs as well, for those consumers that are looking to purchase a used electric vehicle, there's also a federal tax credit for that now.
Shannon Young: So, where does the money for these state tax credits come from?
Carrie Atiyeh: Tax credits are provided by the state through our general fund resources, and so that consumer is able to then receive that tax credit when they're filing their annual tax returns or can work with their dealership to see about getting that tax credit at the point of sale.
Shannon Young: So you have to put up the money up front and then get it back on your taxes if you file all the paperwork correctly.
Carrie Atiyeh: In some circumstances, yes, but we are working to make sure that there are also opportunities to be able to receive that discount upfront at the point of sale rather than having to wait.
Shannon Young: Okay. So how long will these tax credits be available?
Carrie Atiyeh: The $5,000 is in effect through January 1st, 2025, and then it will be reduced.
So now is just a great time to purchase that electric vehicle for somebody who's considering whether to go the electric route right now, being able to take advantage of that full $5,000 between now and the end of 2024, this is a great time.
Shannon Young: These tax credits are obviously a financial perk, but how does the overall cost of owning an EV compare to gas powered vehicles?
Carrie Atiyeh: It's a really good point.
And so while we have now these incentives to lower that upfront purchase price of the electric vehicle, considering those lifetime costs of the vehicle are also really important to consider.
So when we look at the ability to charge an electric vehicle at home versus filling up at the gas tank, a consumer is going to see about 75% savings in their overall fuel costs.
And then in terms of maintenance as well, there's up to 40% savings in maintenance costs of an EV compared to a conventional gas vehicle.
Shannon Young: How many EV models are currently on the market for Coloradans to choose from?
Carrie Atiyeh: There's about 70 total different makes and models available of electric vehicles right now, so consumers are able to find that make model and price point that is best going to fit their budget.
The Colorado state tax credit applies to those new EVs up to $80,000 of MSRP, manufacturer's suggested retail price, so that sticker price that you see on the window when you're shopping for that vehicle, so that $5,000 is available on a vehicle up to $80,000.
And then there's about six electric vehicles now in the market that are under $35,000.
And that's also important because starting January 1st, 2024, the state will be offering an additional $2,500 tax credit for those EVs that have that MSRP of $35,000 or less.
Shannon Young: So not so much here in Boulder where the electric charging stations are pretty much everywhere, but what's the infrastructure like for charging your vehicles, I don't know, on places like in the Western Slope or in southern Colorado?
Carrie Atiyeh: A really important consideration when people are thinking about purchasing an electric vehicle.
Most of the charging happens for folks either at home or at the workplace.
So we know that about 80% of most charging today happens at home or at the workplace.
Of course, not everybody has access to charging at their home, so it's important to consider where those public charging stations are also available.
We have over 4,800 charging ports across the state of Colorado right now.
You can find all of those at the plug share website as you are planning your route around the state, whether you're traveling here in Boulder, throughout the Front Range, or going to the Western Slope, southern Colorado or the Eastern Plains.
And we are significantly investing in building out that infrastructure to make sure that that public infrastructure is in place.
Shannon Young: And now in this, our almost final question, I also know about a program that is coming up that has to do with being able to exchange your gas powered vehicle for an electric vehicle.
Can you give folks a preview of that?
Carrie Atiyeh: Sure. So starting next month, the state will be launching the new Vehicle Exchange Colorado Program to incentivize income qualified Coloradans who have an older, high-emitting vehicle to turn in that vehicle to receive a rebate for the purchase of a new or used electric vehicle.
So we really want to be able to focus on those vehicles that are emitting the most emissions and be able to get those vehicles off the road and replace them with electric vehicles.
Shannon Young: And you had said earlier that there's a goal to get the amount of vehicles to, up to 900,000 electrics.
What's the current census of electric vehicles here in Colorado?
Carrie Atiyeh: Right now, we have about 85,000 electric vehicles registered in the state of Colorado, and our goal by 2030 is 940,000.
Momentum is really great right now, in 2022, over 10% of all new car sales were electric vehicles, and in the first quarter of this year, in 2023, it was over 13%.
Shannon Young: Where can listeners find out more information about all of these new programs that are coming into effect?
Carrie Atiyeh: We have a great website available for Coloradoans, evco.colorado.gov.
The EV CO campaign was launched at the end of 2022 in partnership with the Colorado Energy Office and the Colorado Department of Transportation to answer questions that we know Coloradans have about purchase incentives, charging infrastructure, there's a shopper tool available.
If you would like to find an EV event to do a ride and drive event, there's a calendar of events there, so go to evco.colorado.gov to learn more.
This story was shared with KSUT via Rocky Mountain Community Radio, a network of public media stations in Colorado, Wyoming, Utah, and New Mexico including KSUT.
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