Alternative Fuel, Advanced Vehicle, and Idle Reduction Technology Tax Credit
The Colorado Department of Revenue offers the Innovative Motor Vehicle Credit for a vehicle titled and registered in Colorado that uses or is converted to use an alternative fuel, is a diesel hybrid electric vehicle (HEV), is a plug-in hybrid electric vehicle (PHEV), or has its power source replaced with one that uses an alternative fuel. Electric vehicles (EVs) and PHEVs must have a maximum speed of at least 55 miles per hour. Qualified idle reduction technologies, aerodynamic technologies, and clean fuel trailers are also eligible for the tax credit. Credits for vehicles purchased or converted January 1, 2014, through December 31, 2021, are based on defined vehicle and technology categories as listed below. Credit amounts vary for each category, vehicle weight, and tax year. Percentages apply to the base model manufacturer's suggested retail price (MSRP) for EV and PHEV purchases, and to the actual cost paid for EV and PHEV leases, eligible conversions, idle reduction and aerodynamic technologies, and clean trailer purchases or conversions. The actual cost paid or MSRP must account for eligible federal credits, grants, or rebates; therefore taxpayers must subtract credits, grants, or rebates amounts before applying the percentage calculations listed below.
|1 - Original equipment manufacturer (OEM) light-duty EV or PHEV||See below||See below||See below||See below||See below|
|1A - Conversion of a light-duty motor vehicle to a EV or PHEV||75%||75%||56.25%||37.5%||18.75%|
|2 - Light-duty diesel-electric hybrid passenger vehicle with a minimum fuel economy of 70 miles per gallon (mpg)||15%||15%||11.25%||7.5%||3.75%|
|3 - Light-duty passenger vehicle, light-duty truck, or medium-duty diesel-electric truck conversion that increases original fuel economy by at least 40%||25%||25%||18.75%||12.5%||6.25%|
|4 - Dedicated or bi-fuel OEM vehicle powered by compressed natural gas (CNG) or liquefied petroleum gas (LPG or propane)||18%||15%||11.25%||7.5%||3.75%|
|4A - Dedicated or bi-fuel vehicle converted to use CNG or propane||55%||45%||33.75%||22.5%||11.25%|
|4B - Dedicated or bi-fuel OEM truck powered by liquefied natural gas (LNG) or hydrogen||18%||15%||11.25%||7.5%||3.75%|
|4C - Dedicated or bi-fuel truck converted to use LNG or hydrogen||55%||45%||33.75%||22.5%||11.25%|
|5 - Idle reduction technologies||25%||25%||25%||25%||25%|
|6 - Aerodynamic technologies||25%||25%||25%||25%||25%|
|7 - OEM EV truck or PHEV truck||18%||15%||11.25%||7.5%||3.75%|
|7A - Conversion to an EV truck or PHEV truck||55%||45%||33.75%||22.5%||11.25%|
|8 - Clean fuel refrigerated trailer (purchased after July 1, 2014)||18%||15%||11.25%||7.5%||3.75%|
|8A - Conversion to a clean fuel refrigerated trailer (after July 1, 2014)||55%||45%||33.75%||22.5%||11.25%|
|9 - Hydraulic hybrid trailer||55%||45%||33.75%||22.5%||11.25%|
Credits for EVs and PHEVs in Category 1 are equal to the actual cost incurred to purchase or lease the vehicle, multiplied by the battery capacity, and divided by 100. That amount must be multiplied by a factor to determine the credit amount, as follows: 1.0 for 2014-2018, 0.75 for 2019, 0.50 for 2020, and 0.25 for 2021.
Annual credit caps exist for each technology type and vehicle weight class, and for cumulative annual credits. A person who claimed a tax credit in previous years for the purchase or lease of Model Year 2004 and newer HEV may claim an additional credit for the conversion of the same vehicle to a PHEV. The purchase of a used vehicle may qualify if the vehicle was not previously registered in Colorado. Credits may not be carried forward and a taxpayer will receive a refund for the excess credit.
Credits for vehicles purchased, leased, or converted during the 2014 tax year may be determined in one of two different ways. For more information, see the Department of Revenue's Income 67 FYI publication.
(Reference Colorado Revised Statutes 39-22-516.5, 39-22-516.7, and 39-22-516.8)
Point of Contact
Tax Examiner III
Colorado Department of Revenue
Phone: (303) 205-8211 x6871
Fax: (303) 866-3050