Natural Gas Laws and Incentives in Utah

The list below contains summaries of all Utah laws and incentives related to natural gas.

Laws and Regulations

Alternative Fuel (AFV) Tax Rates

Effective January 1, 2025, compressed natural gas (CNG), hydrogen, liquefied natural gas (LNG), electricity, and propane are taxed at a rate listed below in gasoline or diesel gallon equivalent (GGE/DGE). One GGE is equal to 5.660 pounds (lbs.) of CNG or 2.198 lbs. of hydrogen. One DGE is equal to 6.06 lbs. of LNG. The tax rate for natural gas and hydrogen will be annually adjusted by the State Tax Commission (Commission. The Commission will publish the adjusted fuel tax no later than 60 days prior to the effective date. For more information, see the Commission Fuel Tax Rates website.

(Reference Utah Code 59-13-102 and 59-13-301)

Alternative Fuel Use and Vehicle Acquisition Requirement

At least 50% of new or replacement light-duty state agency vehicles must meet Bin 2 emissions standards established in Title 40 of the U.S. Code of Federal Regulations, or be propelled to a significant extent by electricity, natural gas, propane, hydrogen, or biodiesel.

(Reference Utah Code 63A-9-403)

Alternative Fuel Vehicle Inspection and Permit

The Utah State Tax Commission (Commission) may require vehicles operating on clean fuels to be inspected for safe operation. In addition, clean fuel vehicles that have a gross vehicle weight rating of more than 26,000 pounds or have more than three axels are required to obtain a special fuel user permit from the Commission. Clean fuels are defined as propane, natural gas, electricity, and hydrogen.

(Reference Utah Code 59-13-102, 59-13-303, and 59-13-304)

Compressed Natural Gas (CNG) Vehicle Aftermarket Conversion Requirements

Vehicles converted to operate on CNG must be inspected and certified in accordance with relevant safety standards by a CSA America-certified CNG Fuel System Inspector. The vehicle must also be tested to ensure that it meets emissions standards in the applicable county, or the county with the most lenient emissions standards if the vehicle is registered in a county without its own emissions standards. A person who performs a conversion must certify to the vehicle owner that the conversion does not tamper with, circumvent, or otherwise affect the vehicle’s on-board diagnostic system, if applicable. A CSA America-certified CNG Fuel System Inspector must also inspect the vehicle every three years, or every 36,000 miles, and after a collision occurring at a speed greater than five miles per hour.

The Utah Division of Air Quality may develop programs to facilitate coordination between government agencies and the private sector regarding emissions and anti-tampering compliance testing, vehicle safety, and potential improvements in the air quality of the state.

(Reference Utah Code 19-1-406)

Natural Gas Rate and Cost Recovery Authorization

The Utah Public Service Commission (Commission) may allow a gas corporation to set a natural gas vehicle fuel rate that is less than the full cost of service if it is reasonable and in the interest of the public. If the Commission approves such a request, the remaining costs may be spread to other customers of the gas corporation.

The Commission may also allow a gas corporation to recover expenditures directly related to the construction, operation, and maintenance of natural gas fueling stations and related facilities through an incremental surcharge to all of its rate classes. The Commission may allow this only if it finds that the expenditures are reasonable, do not exceed $5 million in any calendar year, are in the interest of the public, and will result in an annual incremental increase in revenue greater than 50% of the corporation’s annual revenue requirement for the stations and facilities.

The Commission may also allow a gas corporation to establish a natural gas incentive or program to support the use of natural gas, including renewable natural gas, if it is reasonable and in the interest of the public. If the Commission approves such a request, the remaining costs may be spread to other customers of the gas corporation.

(Reference Utah Code 54-4-13.1 and 54-4-13.4)

State Incentives

Alternative Fuel Vehicle Conversion Grants

The Utah Department of Environmental Quality (DEQ) Conversion to Alternate Fuel Grant Program provides grants to businesses and government entities that install conversion equipment on eligible vehicles that allows the vehicles to operate on alternative fuel. Award recipients are required to pass these savings along to the individual who purchases the converted vehicle. Grants may cover 50% of the cost of conversion, up to $2,500. Eligible vehicles must operate solely on alternative fuel and may include on-road vehicles and off-road equipment. Eligible alternative fuels include propane, natural gas, and electricity. For more information, see the DEQ Conversion to Alternative Fuel Grant Program website. The alternative fuel vehicle conversion grant is available through July 1, 2029.

(Reference Utah Code 19-1-403.3, 19-2-301 through 19-2-304, and 63I-1-259)

Alternative Fuel Vehicle Decal and High Occupancy Vehicle (HOV) Lane Exemption

Propane, natural gas, all-electric, plug-in hybrid electric, and hydrogen vehicles are permitted to use HOV lanes, regardless of the number of passengers. Qualified vehicles must display the special decal issued by the Utah Department of Transportation (UDOT). This program expired September 30, 2025. For more information about qualifying vehicles and the exemption, see the UDOT Clean Fuel Vehicle Decal and Permit website.

(Reference Utah Code 41-1a-416, 41-6a-702, 59-13-102, and 72-6-121)

Clean Fleet Grants

The Utah Department of Environmental Quality (DEQ) administers the Clean Fleet Program. The Clean Fleet Program provides reimbursement grants, up to a certain percentage, to fleets to replace existing fleet vehicles and non-road diesel equipment with all-electric (up to 45% reimbursement, including charging equipment and installation), low-nitrogen oxides (NOx) (up to 35% reimbursement), or new diesel (up to 25% reimbursement) vehicles. Replacement vehicles that are low-NOx can be compressed natural gas or diesel engines pursuant to California Air Resources Board Optional Low-NOx Standards. Grants must be used to replace vehicles and equipment that meet age and operational requirements. Replaced vehicles and equipment must be permanently disabled within 90 days of putting the replacement vehicle or equipment into service. For more information, including eligibility requirements, see the Utah Clean Fleet Program website.

Hydrogen Fuel Production Incentives

Businesses that convert natural gas to hydrogen fuel, or produce natural gas solely for use in the production of hydrogen fuel for zero emission vehicles (ZEVs), may be eligible for an oil and gas severance tax credit. Each eligible applicant may receive a tax credit equal to the amount of the severance tax owed, up to $5 million per year.

(Reference Utah Code 35A-8-302 and 59-5-102)

Natural Gas and Electric Vehicle Weight Exemption

A vehicle primarily powered by natural gas or electric battery power may exceed the state’s gross vehicle weight limits by a weight equal to the difference between the weight of the vehicle with the natural gas tank and fueling system or the weight of the vehicle with the electric battery power system and the weight of a comparable vehicle with a diesel tank and fueling system. The maximum gross weight may not exceed 82,000 pounds.

(Reference Utah Administrative Code R909-2-5)

Qualified Heavy-Duty Alternative Fuel Vehicle (AFV) Tax Credit

Taxpayers may be eligible for a tax credit for the purchase of a qualified heavy-duty AFV. The qualified heavy-duty AFV tax credit is available through July 1, 2029. Qualifying fuels include natural gas, electricity, and hydrogen. Each qualified heavy-duty AFV is eligible for the following tax credit amounts:

Year	Credit Amount
2023	$12,000
2024	$10,500
2025	$9,000
2026	$7,500
2027	$6,000
2028	$4,500
2029	$3,000
2030	$1,500

At least 50% of the qualified vehicle’s miles must be driven in the state. A single taxpayer may claim credits for up to 10 AFVs annually. If more than 30% of the total available tax credits in a single year have not been claimed by May 1, a taxpayer may apply for credits for an additional eight AFVs. Up to 25% of the tax credits are reserved for taxpayers with small fleets of less than 40 vehicles. Additional conditions and restrictions may apply. For more information, see the Utah Department of Environmental Quality Alternative Fuel Heavy Duty Vehicle Tax Credit Program website.

(Reference Utah Code 59-7-618 and 63I-1-259 and House Bill 3005, 2024)

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