Colorado residents are advised to buy electric vehicles (EVs) now, as incentives worth thousands of dollars to encourage EV adoption will soon expire. The state’s budget struggles and federal policy changes have led to a reduction in tax credits for new and used EV purchases.
The federal government has eliminated tax credits for the purchase of new EVs, which were worth up to $7,500 for new vehicles and $4,000 for used ones. State tax credits for new EVs will decrease from $3,500 to $750 starting January 1st.
Colorado’s credit cuts are not due to policy changes but a budget crunch. The state aims to put 1 million EVs on the road by 2030, but revenue forecasts have triggered a clause that will automatically halve some of the state’s tax credits. State officials are contemplating ways to continue incentivizing EV purchases, but it may be difficult to tap into general fund revenue for additional incentives.
Despite the expiring incentives, Colorado has seen significant growth in EV adoption. As of May, Coloradans were driving over 187,689 EVs, more than double the number on the road in 2023. The state aims to reduce climate-changing greenhouse gas emissions and improve air quality by putting EVs on the road.
Coloradans can still claim tax breaks for EV purchases priced under $35,000 or participate in the vehicle exchange program, which incentivizes income-qualified individuals to trade in old vehicles for EVs.
Source: https://www.denverpost.com/2025/07/13/colorado-electric-vehicle-credit-decreases-budget-trump-tax-bill