Colorado Hybrid Electric Vehicle Laws and Incentives

State Incentives

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Tax Credit

An income tax credit is available from the Colorado Department of Revenue for the purchase of an AFV or the conversion of a vehicle to operate using an alternative fuel, based on the incremental or conversion cost. HEVs also qualify for this incentive. This credit is only available in the year during which the vehicle was purchased or converted, and a vehicle may only qualify for this credit one time. For an AFV purchase or conversion that permanently replaces a motor vehicle or power source that is ten or more years old, the percentage specified in the table below is doubled, up to a maximum of 100% of the incremental or conversion cost. To the extent the allowable credit exceeds the person's tax liability for that year the excess may be carried forward for up to five years. Lessees or lessors of qualifying vehicles are also eligible for the credit. The value of the credit is based on the EPA emissions classification of the vehicle as follows:

Tax credits for Model Year 2008 HEVs and AFVs are as follows:

For vehicle eligibility updates and historical credit information, see the Colorado Department of Revenue's Alternative Fuel Income Tax Credit Web site. Mild Hybrids and neighborhood electric vehicles do not qualify for the AFV credit since they cannot be operated on Colorado highways.

(Reference Colorado Revised Statutes 39-22-516)

Alternative Fuel Vehicle (AFV) Rebate

A rebate is available from the Colorado Department of Revenue for the purchase of an AFV or for the conversion of a vehicle to operate using an alternative fuel. Vehicles must be owned by the State of Colorado, a political subdivision of the state, or a tax-exempt organization, and be used in connection with the official activities of the entity. HEVs also qualify for this incentive. The rebate is a percentage of the incremental cost if used toward purchasing a new AFV, or is a percentage of the conversion cost if used towards the cost of converting a vehicle to operate using an alternative fuel. For an AFV purchase or conversion that permanently replaces a motor vehicle or power source that is ten or more years old, the percentage specified in the table below is doubled, up to a maximum of 100% of the incremental or conversion cost. Each qualified entity is limited to $350,000 per state fiscal year in total rebates paid. The rebate value is as follows:

For more information about this rebate, see the Colorado Department of Revenue's Alternative Fuel Income Tax Credits Web site.

(Reference Colorado Revised Statutes 39-33-101 through 39-33-106)

High Occupancy Vehicle (HOV) Lane Exemption

Vehicles that meet the definition of the U.S. Environmental Protection Agency (EPA) Inherently Low Emission Vehicle (ILEV) classification and have a gross vehicle weight rating of 26,000 pounds or less may be operated in HOV lanes regardless of the number of occupants and without payment of a special toll or fee. A special sticker must be obtained from the Colorado Department of Transportation. Flexible fuel vehicles are not eligible for the HOV exemption decal. Qualified HEVs must obtain and display an HOV lane exemption decal. Initially, only 2,000 decals will be issued. The program is scheduled to expire on September 30, 2009, unless federal authorization of HEV use of HOV lanes is extended. For more information on the use of HEVs in HOV lanes, see the Colorado Department of Transportation’s Hybrid Vehicle Use in HOV Lanes Web site. (Reference Colorado Revised Statutes 42-4-1012)

State Laws and Regulations

Alternative Fuel Use and Vehicle Acquisition Requirement

The Executive Director of the Colorado Department of Personnel has adopted a policy that requires all state-owned diesel vehicles and equipment to be fueled with a fuel blend of 20% biodiesel and 80% petroleum diesel (B20), subject to the availability of the fuel and so long as the price is no greater than $0.10 more per gallon than the price of conventional diesel. Biodiesel is defined as fuel composed of mono-alkyl esters of long chain fatty acids derived from plant or animal matter that meets ASTM specifications and that is produced in Colorado.

The Executive Director has adopted a policy to increase the utilization of alternative fuels and establish increasing utilization objectives for each succeeding year. Beginning January 1, 2008, the Executive Director must purchase flexible fuel vehicles or hybrid electric vehicles, subject to availability, unless the incremental cost of the vehicle is more than 10%. The Executive Director may adopt a policy to allow some vehicles to be exempt from this requirement.

By January 1, 2009, the Executive Director must report to the general assembly the amount of biodiesel used in the state fleet. The report must include the number of gallons purchased since January 1, 2007, the average price of biodiesel, and a description of economic benefits

(Reference Executive Order D0012 07 (PDF 31KB) and Colorado Revised Statutes 24-30-1104) Download Adobe Reader

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Content Last Updated: 09/18/2008