Cash For Clunkers

Government Incentives For Trading In Your Car In 2025

Learn which states have a cash for clunkers program and what other incentives are available to trade in your car.

 

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Cash for Clunkers Overview


"Cash for Clunkers" initiatives, designed to offer government incentives to motorists for exchanging their old cars for electric vehicles, are experiencing a resurgence in three states.

Each state's program is linked to a specific income threshold and provides different incentive amounts to encourage the trade-in of older, more polluting vehicles for newer, cleaner options.

The 2 states currently with a program similar to “Cash for Clunkers” are California and Colorado. Vermont had a "Cash for Clunkers" program called Replace Your Ride but funds were exhausted in 2024.

Cash for Clunkers History

The idea for getting cash for older, polluting cars is not new.

The Car Allowance Rebate System, or CARS, originated from an op-ed by Princeton economist Alan Blinder in The New York Times in July 2008. Enacted in June 2009, Congress allocated $1 billion for CARS to be distributed from July 1 to the end of November. However, the program, popularly dubbed “Cash for Clunkers”, quickly exhausted its funds within just 30 days, prompting Congress to hastily inject an additional $2 billion, which also ran out in under a month.

Under the program, participants traded in their old, often heavily depreciated and polluting vehicles at dealerships in exchange for vouchers from the government ranging from $3,500 to $4,500, to be used towards the purchase of a new vehicle.

The scrapped vehicles, totaling 677,842, were rendered inoperable and sent to junkyards, resulting in $2.85 billion in rebates, averaging $4,200 per vehicle.

According to a study, the program succeeded in slightly reducing annual emissions from U.S. vehicles with “a one-time effect of preventing 4.4 million metric tons of CO2-equivalent emissions, about 0.4% of US annual light-duty vehicle emissions”.

Trading In Your Old, Polluting Vehicle

Across all 50 states, there are companies that allow you to trade in your old, polluting vehicle for cash. You can then use the money to upgrade to a new ride.

There are also programs where you can donate your car and the proceeds go to a nonprofit.

If you are buying a new vehicle, the dealership might offer to buy your old vehicle as part of the negotiation.

Plus, in 2 states - California and Colorado - there is still a government program similar to the federal Cash For Clunkers.

If you live in one of these 2 states, it’s worth looking into to compare to programs from private companies. All 3 tie the incentives to income. Read more below.

How You Could Save Money On An EV

Our nonprofit’s free EV Cost-Savings Calculator can help show how much you could save by switching to an EV. You can then use our nonprofit’s guide to the least expensive electric vehicles. You can also check out EV incentives checklist which can help find thousands of dollars in additional savings.

 
 

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California’s Cash For Clunkers in 2025


CLEAN CARS 4 ALL

If you own an older vehicle and are considering a trade-in, four regions in California offer various versions of the Clean Cars 4 All program.

This initiative is designed to benefit low-income residents living in or around disadvantaged communities. It started in the San Joaquin Valley, South Coast, Bay Area, and Sacramento air districts and they have since expanded the program statewide. If you are outside of the air districts originally covered, you can apply through DCAP (Driving Clean Assistance Program).

The program provides financial assistance for replacing older, polluting cars with clean electric vehicles. You could receive up to $9,500 to make the switch.

Learn more if you are located in these 4 areas:

San Diego is becoming the fifth area with a CC4A program. 

For people in Antelope Valley, San Francisco Bay Area, San Luis Obispo County, Mojave Desert, Ventura County, you can also look into the Old Car Buy Back and Scrap Program.

And again if you are outside of these districts then you can try to apply through DCAP (Driving Clean Assistance Program). To be eligible for DCAP assistance, you must not have participated in any CARB light-duty vehicle purchase incentive programs, including the Clean Vehicle Rebate Project (CVRP), Clean Vehicle Assistance Program (CVAP), regional Driving Clean Assistance Program (DCAP), or Clean Cars 4 All (CC4A).

 
 

Colorado’s Cash For Clunkers in 2025


The Vehicle Exchange Colorado

A program called Vehicle Exchange Colorado (VXC) assists eligible Colorado residents in trading in and upgrading their older or heavily polluting vehicles to electric vehicles (EVs). This initiative is designed to help reduce emissions and promote cleaner transportation options in the state.

This program provides a statewide point-of-sale rebate to help offset part of the initial cost of an EV when purchased or leased from a certified car dealership.

Eligible Coloradans can access rebates of up to $6,000 for a new electric vehicle (BEV or PHEV) or $4,000 for a used one via the VXC program.

VXC Key Points

  • Rebate Limitations: The VXC rebate must not surpass the remaining vehicle cost after applying other rebates and discounts and cannot cover sales tax, destination charges, or shipping fees.
  • Trade-In Value: No additional trade-in value for the old vehicle is provided beyond the VXC rebate.
  • Retroactivity: Rebates are not retroactive and must be redeemed at the time of purchase or lease.
  • Price Limits: New vehicles must have a manufacturer’s suggested retail price (MSRP) of $80,000 or less, and used vehicles must have a final negotiated price of $50,000 or less.
  • Stackable Rebates: These rebates can be paired with state and federal tax credits and other EV incentives, though not all other programs allow combinations.
  • Income Requirements: To qualify for the VXC rebate, your household income must be less than 80% of the area median income (AMI) or you must be enrolled in an approved financial assistance program.
  • Vehicle Eligibility: Old or high-emitting vehicles must meet specific requirements to qualify for trade-in, including being operational and meeting title and registration conditions.

There are a number of requirements needed to have your old vehicle qualify to be traded in that can be found on the VXC website.

 

Cash For Clunkers: Are We Really Targeting The Vehicles That Pollute The Most?


“Cash for Clunkers” Programs In 2025 Should Focus on Gasoline Superusers

Existing “Cash for Clunkers” programs have a significant flaw: they do not consider how much the older vehicle is driven. As it stands, someone who keeps a "clunker" stationary in their driveway receives the same incentive as someone who drives their vehicle 30,000 miles a year.

While some states offer incentives to retire the "most polluting" or "highest emitting" vehicles, this terminology is often deceptive. "Most polluting" typically refers to vehicles that have the potential to emit more pollutants due to their age, not necessarily those that actually emit more because they are driven frequently.

A 1999 Chevy Blazer sitting in the driveway most of the year is not polluting much, making it an inefficient use of government funds to incentivize its scrapping. Conversely, that same vehicle driven 30,000 miles a year is significantly polluting.

Removing older, more polluting cars from the road is a commendable goal, but vehicles only pollute when they are driven. The more they are driven, the more they pollute. Therefore, Cash for Clunkers awards should focus on those who drive and pollute the most.

Coltura's gasoline consumption data can easily identify these drivers, and odometer readings from vehicle registrations and dashboards can calculate their average annual mileage.

Applicants for the incentive could provide their vehicle registration (which lists the odometer reading when they acquired the vehicle) and their current odometer reading to prove their vehicle is actually a high polluter.

It's simple—the more a vehicle is driven, the more it actually pollutes. For the best value of taxpayer money and public health, "scrap and replace" policies need to distinguish between potentially and actually polluting vehicles, ensuring that Cash for Clunkers programs prevent as much pollution as possible.

Learn more about Coltura’s Gasoline Superuser approach.

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Conclusion

 
 

While the federal Cash for Clunkers program is no longer available in 2025, California and Colorado have implemented their own versions aimed at encouraging the trade-in of older, polluting vehicles for cleaner alternatives. These state-level programs offer substantial financial incentives, particularly for low-income residents, helping them make the transition to electric vehicles. As the push for cleaner transportation continues, these initiatives are essential steps in reducing emissions. Be sure to explore your state's options and compare them with other private programs to maximize your savings.

Looking for more info on switching to an EV? Check out the EV Roadmap.

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