Colorado Laws and Incentives for Vehicle Owner/Driver

The list below contains summaries of all Colorado laws and incentives related to Vehicle Owner/Driver.

State Incentives

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 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 are also eligible for the tax credit. Credits for vehicles purchased or converted January 1, 2012, through December 31, 2021, are based on defined vehicle and technology categories as listed below. Credit amounts vary for each category and tax year with percentages applying to incremental cost for alternative fuel vehicle (AFV) purchases and power source replacements and actual cost for conversions and idle reduction technologies.

1 - Original equipment manufacturer (OEM) light-duty EV or PHEVSee belowSee belowSee belowSee belowSee below
1A - Conversion of a light-duty motor vehicle to a EV or PHEV75%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)25%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%35%25%18.75%12.5%6.52%
4 - Dedicated or bi-fuel OEM light-duty passenger vehicle, light-duty truck, or medium-duty truck powered by compressed natural gas (CNG) or liquefied petroleum gas (LPG or propane)10.5%12.25% (2014-2016); 10.5% (2016-2018)7.875%5.25%2.625%
4A - Dedicated or bi-fuel light-duty passenger vehicle, light-duty truck, or medium-duty truck converted to use CNG or propane35%25%18.75%12.5%6.25%
5 - Idle reduction technologies25%25%18.75%12.5%6.25%

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 2013-2018, 0.75 for 2019, 0.50 for 2020, and 0.25 for 2021.

The credit is capped at $6,000 for the following: OEM or converted AFVs, HEVs, PHEVs, idle reduction technologies, and power source replacements. The credit for PHEV conversions is capped at $7,500 until January 1, 2014, and $6,000 thereafter. 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 CNG, electric, and plug-in hybrid electric vehicles purchased, leased, or converted during the 2013 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 House Bill 13-1247, 2013 and Colorado Revised Statutes 39-22-516.5 and 39-22-516.7)

Point of Contact
Kurt Bloomer
Tax Examiner III
Colorado Department of Revenue
Phone: (303) 205-8211 x6871
Fax: (303) 866-3050

Plug-in Electric Vehicle (PEV) and Electric Vehicle Supply Equipment (EVSE) Grants

The Colorado Energy Office (CEO) and Regional Air Quality Council (RAQC) provide grants to support PEV adoption in fleets. RAQC grants will cover 80% of the incremental cost of a qualified PEV, up to $8,260. Both CEO and RAQC grants will fund 80% of the cost of EVSE, up to $6,260. Eligible applicants are local governments, school districts, state/federal agencies, non-profit educational institutions, and other non-profit agencies. Landlords of multi-family apartment or condominium complexes, owners associations of common interest communities, and businesses that own multi-vehicle parking facilities for fleet, public, employee, or guest use are also eligible for EVSE funding. Funding priority will be given to organizations that are excluded from the Colorado state credit. Criteria and eligibility differ depending on which agency provides funding. For more information, see the RAQC Clean Air Fleets Electric Vehicle and Charging Station Grant Application website. (Reference Senate Bill 13-126, 2013 and Colorado Revised Statutes 24-38.5-103)

Low Emission Vehicle (LEV) Sales Tax Exemption

Vehicles, vehicle power sources, or parts used for converting a vehicle power source to reduce emissions are exempt from state sales tax. This exemption applies to vehicles that are certified to federal LEV standards and have a gross vehicle weight rating of over 10,000 pounds. The vehicle power source includes the engine or motor and associated wiring, fuel lines, engine coolant system, fuel storage containers, and other components. (Reference Colorado Revised Statutes 39-26-719)

Hybrid Electric Vehicle (HEV) High Occupancy Vehicle (HOV) Lane Exemption

The Colorado Department of Transportation (CDOT) allows HEVs to travel in HOV and high occupancy toll (HOT) lanes. Qualifying vehicles must obtain a permit and display an HOV exemption decal and a toll transponder. CDOT reached its quota of 2000 permits and will place new applicants on a waiting list (verified June 2013). For more information, visit the CDOT Hybrid Vehicle Use in the HOT/HOV Lanes website. (Reference Colorado Revised Statutes 42-4-1012)

Point of Contact
Teresa Carrillo
Commercial Vehicle Operations Manager
Colorado Department of Transportation
Phone: (303) 757-9716
Fax: (303) 757-9719

Alternative Fuel Vehicle (AFV) Weight Limit Exemption

Gross vehicle weight rating limits for AFVs are 1,000 pounds greater than those for comparable conventional vehicles, as long as the AFVs operate using an alternative fuel or both alternative and conventional fuel, when operating on a highway that is not part of the interstate system. (Reference Colorado Revised Statutes 25-7-106.8 and 42-4-508)

Utility/Private Incentives

Electric Vehicle Charging Incentive - Xcel Energy

Qualified Xcel Energy customers can participate in a pilot program and earn a $100 credit for allowing Xcel Energy to interrupt their vehicle charging for a limited number of hours throughout the year. Xcel Energy will communicate wirelessly through a control module that interrupts power to the customer's Level 2 electric vehicle supply equipment. The pilot will run through September 2014. For more information, including the pilot program application, see Xcel Energy's Electric Vehicle Charging Station Pilot Program website

Laws and Regulations

Electric Vehicle Supply Equipment (EVSE) Multi-Unit Dwelling Installations and Access

A tenant may install Level 1 or Level 2 EVSE at their own expense on or in leased premises. The landlord may seek a fee or reimbursement for the actual cost of electricity as well as the cost of installation or upgrades to existing equipment. In addition, the tenant may request that the EVSE be accessible by other tenants, in which case the EVSE must be in compliance with all applicable requirements, and the landlord may seek a fee to reserve a specific parking space. The landlord may also require the tenant to comply with safety, system registration, and aesthetic requirements or provisions.

Common interest communities must also provide residents with an opportunity to charge plug-in electric vehicles (PHEVs) and may not create restrictions around EVSE. Common interest communities are encouraged to allow EVSE and to apply for grants from the Electric Vehicle Grant Fund or otherwise fund the installation of EVSE on common property as an amenity for residents and guests.

(Reference Senate Bill 13-126, 2013 and Colorado Revised Statutes 38-12-601 and 38-33.3-106.8)

Alternative Fuel and Advanced Vehicle Tax

Excise taxes are imposed on compressed natural gas (CNG), liquefied natural gas (LNG), and liquefied petroleum gas (LPG) effective January 1, 2014, on a per gallon basis as follows:

201420152016201720182019 & Beyond

Beginning January 1, 2014, plug-in electric vehicle (PHEV) owners must pay an annual registration fee of $50. After paying the fee, the vehicle owner must affix the PHEV registration decal to the front windshield of the vehicle. Fees contribute to the Highway Users Tax Fund and the Electric Vehicle Grant Fund.

(Reference House Bill 13-1110, 2013 and Colorado Revised Statutes 39-27-102 and 42-3-304)

Alternative Fuel Resale and Generation Regulations

A corporation or individual that resells alternative fuel supplied by a public utility for use in an alternative fuel vehicle (AFV) is not subject to regulation as a public utility. Additionally, a corporation or individual that owns, controls, operates, or manages a facility that generates electricity exclusively for use in AFV charging or fueling facilities is not subject to regulation as a public utility provided that the electricity is generated on the property where the charging or fueling facilities are located and the electricity is generated from a renewable resource. For the purposes of this definition, alternative fuel is defined as propane, liquefied natural gas, compressed natural gas, or electricity. (Reference Colorado Revised Statutes 40-1-101-104)

Alternative Fuel Vehicle (AFV) Registration

Upon registering a motor vehicle with the Colorado Department of Revenue Division of Motor Vehicles, the vehicle owner must report the type of alternative fuel used to operate the vehicle and whether the vehicle is dedicated to one alternative fuel or uses more than one fuel. The Department of Revenue provides forms for the purpose of registering motor vehicles and must include space for the following fuel types: gasoline, diesel, propane, electricity, natural gas, methanol/M85, ethanol/E85, biodiesel, and other. For more information, please see the Colorado Department of Revenue Division of Motor Vehicles page. (Reference Colorado Revised Statutes 42-3-113)

Low-Speed Electric Vehicle (EV) Access to Roadways

A low-speed EV is a self-propelled vehicle using electricity as its primary propulsion method, has at least three wheels in contact with the ground, does not use handlebars to steer, displays a vehicle identification number, and meets manufacturer requirements as defined in Title 49 of the Code of Federal Regulations, section 565. A low-speed EV may be operated on a roadway with a speed limit of up to 40 miles per hour (mph) as long as the roadway's lane is at least 11 feet wide, the roadway provides two or more lanes in either direction, and the Colorado Department of Transportation has determined that operation of a low-speed EV on the roadway poses no substantial safety risk. Otherwise, a low-speed EV may only be operated on a roadway with a speed limit of 35 miles per hour (mph) or less. Regardless, a low-speed EV may directly cross any roadway with a speed limit greater than 35 mph. Low-speed EVs may not be sold or offered for sale unless they comply with state vehicle safety requirements.

A Class-B low-speed EV is defined as a low-speed EV that is capable of traveling at greater than 25 mph but less than 45 mph. A Class-B low-speed EV may be operated only on a roadway with a speed limit of 45 mph or less, but may directly cross a roadway with a speed limit greater than 45 mph. The Colorado Department of Revenue may not register or issue a title for a Class-B low-speed EV until after the U.S. Department of Transportation has adopted a federal motor vehicle safety standard for low-speed EVs that authorizes operation at greater than 25 mph but less than 45 mph. Neither a low-speed EV nor a Class-B low-speed EV may be operated on a limited-access highway.

(Reference Colorado Revised Statutes 12-6-120, 42-1-102, 42-4-109.5, 42-4-109.6)