Alternative Fuel, Advanced Vehicle, and Idle Reduction Equipment Tax Credit
An income tax credit is available from the Colorado Department of Revenue for a motor vehicle titled and registered in Colorado that uses or is converted to use an alternative fuel, is a hybrid electric vehicle (HEV), or has its power source replaced with one that uses an alternative fuel. Qualified idle reduction technologies are also eligible for the tax credit. Credits are based on defined vehicle and technology categories as follows:
| Category | January (Jan.) 1, 2010, to Jan. 1, 2012 | Jan. 1, 2012, to Jan. 1, 2013 | Jan. 1, 2013, to Jan. 1, 2014 | Jan. 1, 2014, to Jan. 1, 2015 | Jan. 1, 2015, to Jan. 1, 2016 |
|---|---|---|---|---|---|
| 1 - Vehicle meeting Tier 2, Bin 1 federal emissions standards | 85% | 75% | 75% | 75% | 75% |
| 2 - Light-duty diesel-electric hybrid passenger vehicle with a minimum fuel economy of 70 miles per gallon (mpg) | 65% | 45% | 25% | 15% | 15% |
| 3 - Light-duty passenger vehicle, light-duty truck, or medium-duty diesel-electric truck conversion that increases original fuel economy by at least 40%; or a new diesel-electric or gasoline-electric hybrid medium-duty truck with 30% greater fuel economy than a comparable vehicle | 75% | 55% | 35% | 25% | 25% |
| 4 - Light-duty passenger vehicle, light-duty truck, or medium-duty truck powered by compressed natural gas, either original equipment manufacturer or converted vehicles | 75% | 55% | 35% | 25% | 25% |
| 5 - Idle reduction technologies | 25% | 25% | 25% | 25% | 25% |
| 6 - Vehicle meeting Tier 2, Bin 2 or 3 federal emissions standards, with a fuel economy of at least 40 mpg | 75% | 10% | 10% | 0% | 0% |
The credit is capped at $6,000 for the following: alternative fuel vehicles (AFVs), AFV conversions, HEVs, plug-in hybrid electric vehicles (PHEVs), PHEV conversions, idle reduction technologies, and power source replacements. Beginning in 2012, the cap on PHEV conversions increases to $7,500. Individuals who claimed a tax credit in previous years for the purchase of a Model Year 2004 or newer HEV may be eligible to claim an additional credit for the conversion of the same vehicle to a PHEV. Credits claimed in tax years 2010 and 2011 for Category 3 and Category 4 vehicles that permanently replace vehicles or power sources at least 12 years old are eligible for 1.25 times the percentages displayed above, up to 100%. Credits generated in 2010 or 2011 that exceed the tax due are refundable but cannot be carried forward. Used vehicles may qualify with proof that the prior owners did not claim the tax credit. For additional information, see the Department of Revenue's Income 9 FYI publication.
(Reference House Bill 1018, 2011, and Colorado Revised Statutes 39-22-516)
Point of Contact
John Doty
Manager, Sales Tax Administration Unit
Colorado Department of Revenue
Phone: (303) 205-8211 x6889
jdoty@spike.dor.state.co.us