Beginning on Thursday, August 31st, Colorado is launching a new incentive for income-qualified Coloradans to purchase a new or used EV. Titled “Vehicle Exchange Colorado“, this can provide up to a $6,000 incentive if you trade in your existing older vehicle and if you meet the other qualifications (note that this is in addition to Colorado’s $5,000 incentive for a new EV and the Federal incentive of up to $7,500 for a new EV).
This incentive has quite a few qualifications you have to meet, so many readers of this blog likely won’t qualify. But some of you might (particularly if you have a large family or perhaps are just starting out and have a low income), and even if you don’t, you might know someone who does.
- Your income needs to be below 80% of the median area income. So, for example, if you live in Denver County and have a household size of 4, your income would have to be below $99,280. Note that they are using total income (line 9 of your federal return), not AGI (line 11) for some reason, which will make this a bit harder for some folks to meet. You can also use your enrollment in Colorado Affordable Residential Energy (CARE) Program, Colorado’s Weather Assistance Program (WAP), Medicaid, Regional Transportation District (RTD) LiVE, Section 8 voucher holder, Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), State of Colorado Low-Income-Energy Assistance Program (LEAP), or Supplemental Nutrition Assistance Program (SNAP) to qualify.
- Your trade-in vehicle must be operational, gas or diesel powered, model year 2011 or earlier (or has failed an emissions test), must be owned (no loan), and the title must be issued solely to the participant. (I don’t know why it’s this way, but I got confirmation that if there are two names on the title it won’t qualify.)
- You must purchase a fully EV (BEV) vehicle or a plug-in hybrid (PHEV) with a pre-tax purchase price of less than $50,000 from a participating dealer. Note that the $50,000 is before add-ons and after applying other rebates and tax breaks. The example they give is Xcel’s income-qualified $5,500 EV rebate, so it’s unclear to me if this also could include Colorado’s $5,000 rebate (which is currently not stackable with Xcel’s) and the Federal $7,500 rebate. If you can include those two, that takes the MSRP up to $62,500.
- The rebate is $6,000 for new, $4,000 for used, but it’s important to note that you do not get any “trade-in” amount for the car. This rebate replaces any trade-in value. Which means your car not only needs to be older, but needs to have a trade-in value significantly less than $6,000 (new) or $4,000 (used) for this rebate to make sense. So this really is a “cash for clunkers” program.
Beginning at 9 am on August 31st, the application link will be available on the website.
So, as I’ve done before, let’s look at some possibilities. For example, you can get a new Chevy Bolt for around $30,000 (perhaps even a bit less, but they don’t seem to be stocking those trims). If you meet the qualifications above, you would receive $6,000 for your vehicle, $5,000 from Colorado’s state tax incentive, and up to $7,500 from the federal tax incentive. Since the federal tax incentive is not refundable, you can only get $7,500 if you have that much in total federal tax liability. Since folks applying for this have income-qualifications, some of them may not get to claim the full $7,500 federal tax incentive. So the new Bolt will be somewhere between $11,500 and $19,000 depending on how much of the federal credit you can claim. And, if you can wait until after January 1st (and can still find a Bolt available), you’ll get an additional $2,500 off from Colorado, taking your final price to between $9,000 and $16,500.
Note that you don’t have to go with the Bolt, this will apply up to that $50,000 threshold (and perhaps beyond depending on how they treat the tax credits), which means you can purchase many EVs, including at least some models of a Tesla Model 3 or Y (*referral code gets you an extra $500 off) and get this as well (but, of course, that’s going to cost you more total than for the Bolt, probably in the $22,000 to $38,000 range, depending on how much federal credit you can claim). And while the used EV market is pretty nascent, you might be able to find some great deals there as well ($4,000 from your “vehicle exchange” plus 30% of the price up to a max of $4,000 federal tax incentive, so up to $8,000 off of a used EV priced less than $25,000).
So if you qualify (or you know someone who does) and you have an old car that isn’t worth much, consider applying for this on Thursday. If you are approved, you have up to 180 days to cash in the rebate, so you’ll have time to shop around and think about it.
Fisch Financial 