Alternative Fuel, Advanced Vehicle, and Idle Reduction Equipment Tax Credit

Expired: 12/31/2011

Beginning January 1, 2010, the Alternative Fuel Vehicle Credit is available from the Colorado Department of Revenue for original equipment manufacturer alternative fuel, hybrid electric, and plug-in hybrid electric vehicles and vehicle conversions that are titled and registered in Colorado. Qualified idle reduction technologies are also eligible for the tax credit. The credits are a percentage of the incremental cost of the vehicle, or the cost of the technology or conversion, as follows:

CategoryCredit Amount
1 - Vehicle meeting Tier 2, Bin 1 federal emissions standards85%
2 - Light-duty diesel-electric hybrid passenger vehicle with a minimum fuel economy of 70 miles per gallon (mpg) 65%
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 vehicle75%
4 - Light-duty compressed natural gas passenger vehicle, light-duty truck, or medium-duty truck75%
5 - Idle reduction technologies25%
6 - Vehicle meeting Tier 2, Bin 2 or 3 federal emissions standards, with a fuel economy of at least 40 mpg75%
7 - Vehicle meeting Tier 2, Bin 2 or 3 federal emissions standards, with a fuel economy of at least 30 mpg, but less than 40 mpg50%

The credit is capped at $6,000 for all categories except Category 4. For Category 3 and 4 vehicles, the credit percentage is multiplied by 1.25, up to a maximum of 100%, if the vehicle permanently replaces a vehicle that is 12 years old or older and is rendered inoperable.

The same vehicle may not be eligible for this credit and the credit outlined in Colorado Revised Statutes 39-22-516.2.5. Individuals who claimed a tax credit in previous years for the purchase of a Model Year 2004 or newer HEV may, however, be eligible to claim an additional credit for the conversion of the same vehicle to a PHEV.

The credit for Category 7 vehicles expires on January 1, 2011. The remaining credits are available through the tax year beginning on January 1, 2011. For additional information, see the Department of Revenue's Income 67 FYI publication.

(Reference Colorado Revised Statutes 39-22-516.2.6)