Laws and Incentives

Listed below are the summaries of all current laws, incentives, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

• State Incentives (7)
• Utility / Private Incentives (5)
• Laws and Regulations (17)

State Incentives

Arizona's National Electric Vehicle Infrastructure (NEVI) Planning

The U.S. Department of Transportation’s (DOT) NEVI Formula Program requires the Arizona Department of Transportation (ADOT) to submit an annual EV Infrastructure Deployment Plan (Plan) to the DOT and U.S. Department of Energy (DOE) Joint Office of Energy and Transportation (Joint Office), describing how the state intends to distribute NEVI funds. The submitted plans must be established according to NEVI guidance.

For more information about Arizona’s NEVI planning process, see the ADOT Arizona Electric Vehicle Program website. To review Arizona’s NEVI plan, see the Joint Office State Plans for EV Charging website.

Alternative Fuel Vehicle (AFV) Parking Incentive

An individual driving a dedicated AFV may park without penalty in parking areas that are designated for carpool operators, provided the vehicle is using alternative fuel. Recognized alternative fuels include propane, natural gas, electricity, hydrogen, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 1-215 and 28-877)

High Occupancy Vehicle (HOV) Lane Exemption

The Arizona Department of Transportation (ADOT) allows qualified alternative fuel vehicles (AFV) with an AFV license plate to use HOV lanes, regardless of the number of occupants. Qualified AFVs include vehicles powered exclusively by electricity, propane, natural gas, hydrogen, or a blend of hydrogen with propane or natural gas. This exemption expires September 20, 2025. For more information about vehicle eligibility and HOV access, visit the ADOT AFV website.

Reduced Alternative Fuel Vehicle (AFV) License Tax

The vehicle license tax for an AFV registered in Arizona is $4 for every $100 in assessed value. The minimum amount of the annual AFV license tax is $5. AFV assessed values are determined as follows:

• For AFVs initially registered between January 1, 2022, and December 31, 2022, the assessed value of the AFV is 20% of the manufacturer’s suggested retail price (MSRP);
• For each succeeding year, for the purpose of calculating the license tax, the assessed value of the AFV is reduced by 15% from the value from the preceding year.

For the purpose of this tax, AFVs include those powered exclusively by propane, natural gas, electricity, hydrogen, or a blend of hydrogen with propane or natural gas. For more information, see the ADOT AFV website. The reduced alternative fuel vehicle license tax does not apply to any vehicle purchased on or after December 31, 2022.

(Reference Arizona Revised Statutes 1-215, 28-5801, 28-5805)

Alternative Fuel and Alternative Fuel Vehicle (AFV) Use Tax Exemption

Arizona use taxes do not apply to natural gas or propane used in an AFV, AFVs converted to operate on alternative fuels, or the equipment used to convert a diesel vehicle to an AFV. Recognized alternative fuels include propane, natural gas, electricity, hydrogen, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 1-215 and 42-5159)

Idle Reduction and Alternative Fuel Vehicle Weight Exemption

A heavy-duty vehicle that is equipped with qualified idle reduction technology may exceed the state’s gross, total axle, or bridge formula vehicle weight limits by up to 550 pounds (lbs.) to accommodate the weight of the idle reduction technology. To qualify for the exemption, the vehicle operator must also be able to prove the weight of the idle reduction technology and demonstrate that the technology is fully functional. Any vehicles fueled by natural gas, electricity, or hydrogen may exceed the limits by up to 2,000 lbs as described by Title 23 U.S. Code, section 127(s).

(Reference Arizona Revised Statutes 28-1100)

Zero Emission Vehicle Emissions Test Exemption

Electric vehicles registered in Arizona are not required to complete annual emissions testing. All alternative fuel vehicles, excluding electric and hydrogen vehicles, used to commute into Phoenix or Tucson are required to be emissions tested before they are registered. For more information, visit the Arizona Department of Environmental Quality website.

(Reference Arizona Revised Statutes 49-541, 49-542 and 49-542.05)

Utility / Private Incentives

Arizona Public Service Company - Arizona

Arizona Public Service Company is a municipal utility that operates in Arizona. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the Arizona Public Service Company website.

Residential Incentives

Non-Residential Incentives

Liberty Utilities - Arizona

Liberty Utilities is an investor-owned utility (IOU) that operates in multiple states. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the Liberty Utilities website.

Residential Incentives

Non-Residential Incentives

Mohave Electric Cooperative (MEH) - Arizona

Mohave Electric Cooperative (MEH) is a cooperative that operates in Arizona. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the Mohave Electric Cooperative (MEH) website.

Residential Incentives

Non-Residential Incentives

Salt River Project - Arizona

Salt River Project is an investor-owned utility (IOU) that operates in Arizona. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the Salt River Project website.

Residential Incentives

Non-Residential Incentives

Tucson Electric Power - Arizona

Tucson Electric Power is an investor-owned utility (IOU) that operates in Arizona. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the Tucson Electric Power website.

Residential Incentives

Non-Residential Incentives

Laws and Regulations

Alternative Fuel Vehicle (AFV) Special License Plate

The Arizona Department of Transportation (ADOT) must issue a special license plate to dedicated AFVs. Dedicated AFVs include vehicles powered exclusively by propane, compressed natural gas, electricity, hydrogen, a blend of hydrogen with propane or natural gas. AFVs may not be capable of operating on any other fuel type. There is no limit to the number of AFV license plates ADOT can issue. The Arizona Department of Environmental Quality (ADEQ) must inspect vehicles converted to operate solely on alternative fuel and issue an Alternative Fuel Certificate before converted vehicles may receive the AFV special plate. State or agency directors who conduct activities of a confidential nature and use AFVs are exempt from the requirement to display an AFV special license plate. For more information, see the ADOT Specialty Plates website.

(Reference Arizona Revised Statutes 1-215 and 28-2416)

Autonomous Vehicle (AV) Operation Requirements

An AV may be operated without a driver physically present in the vehicle if a law enforcement interaction plan is submitted to the Arizona Department of Transportation (ADOT) and the Department of Public Safety. Additionally, a written statement must be submitted to ADOT acknowledging the AV meets the following requirements:

• It is in compliance with applicable federal laws and federal motor vehicle safety standards;
• It can achieve a minimal risk condition if the vehicle is unable to perform an intended task or exists its operational design domain;
• It is in compliance with applicable state traffic and motor safety laws;
• It meets all applicable certificate of title, registration, licensing, and insurance requirements.

An AV is defined as a motor vehicle that is equipped with the hardware and software that is collectively capable of performing the entire dynamic driving task on a sustained basis.

(Reference Arizona Revised Statutes 28-9701 and 28-9702)

Electric Vehicle (EV) Parking Space Regulation

An individual is not allowed to stop, stand, or park a motor vehicle within any parking space specifically designated for parking and charging EVs unless the motor vehicle is an EV and has been issued an alternative fuel vehicle special plate or sticker. Violators may be subject to a civil penalty of at least $350.

(Reference Arizona Revised Statutes 28-876)

Electric Vehicle (EV) Definition and Implementation Plan

The Arizona Corporation Commission (Commission) defines EVs as transportation vehicles that use electricity for propulsion. The Commission issued an EV policy statement that provides guidelines on EVs, charging infrastructure, and transportation electrification to utilities the Commission regulates. The policy addresses the state of EVs in Arizona, EV benefits, and barriers to adoption. This policy purposefully does not define the Commission’s role with respect to EV charging infrastructure operated by non-utilities at this time, but the Commission will explore it in the future. For more information, see the Commission’s EV policy statement and the Corporation Commission website.

(Reference Docket RU-00000A-18-0284 decision number 77044)

Biofuels Definitions and Specifications

Biodiesel is defined as a fuel that is produced from nonpetroleum renewable resources and meets ASTM Standard D6751 and the U.S. Environmental Protection Agency registration requirements for fuels and fuel additives established in Section 211 of the Clean Air Act. E85 is defined as a blend of fuel ethanol and gasoline that meets ASTM Standard D5798. The Arizona Department of Weights and Measures must adopt rules to establish and enforce federal standards and ASTM test methods for biofuels and biofuel blends, and blenders of biodiesel must follow the established reporting requirements.

(Reference Recodified to Arizona Revised Statutes 3-3401 and 3-3433 and Arizona Administrative Code R3-7-718)

Joint Use of Government Fueling Infrastructure

To the extent practical, an Arizona state agency or political subdivision that operates an alternative fueling station must allow vehicles, other state agencies, or political subdivisions to fuel at the station. For the purpose of this requirement, alternative fuels include propane, natural gas, electricity, hydrogen, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 1-215 and 49-572)

Municipal Alternative Fuel Vehicle (AFV) Acquisition Requirements

Local governments in Maricopa, Pinal, and Yavapai counties with a population of more than 1.2 million people must develop and implement vehicle fleet plans to encourage and increase the use of alternative fuels in municipal fleets. At least 75% of the total municipal fleet must operate on alternative fuels. Alternatively, municipal fleets may meet AFV acquisition requirements through biodiesel or other alternative fuel use or apply for waivers. Local governments in counties with populations of more than 500,000 people with bus fleets must purchase or convert buses to operate on alternative fuels. For the purpose of these requirements, alternative fuels include propane, natural gas, electricity, hydrogen, qualified diesel fuel substitutes, E85, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 9-500.04, 49-474.01, 49-541, and 49-571)

Municipal Alternative Fuel Tax Regulation

A taxing jurisdiction may not levy a tax or fee, however denominated, on natural gas or propane used to propel a motor vehicle.

(Reference Arizona Revised Statutes 42-6004)

Federal Fleet Operation Regulations

Federal fleets based in Arizona that operate primarily in counties with a population of more than 1.2 million people must be comprised of at least 90% alternative fuel vehicles. Alternatively, federal fleets may meet acquisition requirements through alternative fuel use or apply for waivers. For the purpose of these requirements, alternative fuels include propane, natural gas, electricity, hydrogen, qualified diesel fuel substitutes, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 1-215 and 49-573)

Alternative Fuel Vehicle (AFV) Dealer Information Dissemination Requirement

New motor vehicle dealers must make information about AFVs and Arizona-based incentives for purchasing or leasing AFVs available to the public. For the purpose of these requirements, alternative fuels include propane, natural gas, electricity, hydrogen, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 1-215 and 28-4414)

Propane and Compressed Natural Gas (CNG) Device Fee

The Arizona Department of Weights and Measures collects license fees for certain propane and CNG fueling devices used for commercial purposes. A penalty equal to 20% of the fee may be imposed for late license fee payments.

(Reference Recodified as Arizona Revised Statutes 3-3452)

Neighborhood Electric Vehicle (NEV) Access to Roadways

NEVs may not operate at speeds greater than 25 miles per hour (mph). An NEV may not operate on a roadway with a speed limit greater than 35 mph, except to cross that roadway. NEVs must display a notice of the operational restrictions (either painted or otherwise permanently attached) on the vehicle in a location that is in clear view of the driver.

(Reference Arizona Revised Statutes 28-966 and 28-2157)

School Bus Idle Reduction Pilot Program

As part of the Children’s Environmental Health Project, the Arizona Department of Environmental Quality (ADEQ) administers the School Bus Idling Pilot Program (Program) to reduce bus idling near schools. ADEQ has worked with school districts to develop a draft bus idling policy, which many of the school districts involved in the pilot program have implemented. The Program’s best practices include: having drivers turn off buses upon reaching a school or other location and not turn on the engine until the vehicle is ready to depart; parking buses at least 100 feet from a school air intake system; and posting appropriate signage advising drivers to limit idling near the school. For more information, refer to the ADEQ School Bus Idling Pilot Program website.

Public Utility Definition

A company that sells electricity for the purpose of electric vehicle charging is not considered a public service corporation. Companies may charge a flat or time-based fee for this electricity.

(Reference Arizona Revised Statutes 40-213)

School Transportation Advisory Council

The Student Transportation Advisory Council must advise the Arizona Department of Administration on increasing public safety, transportation efficiencies, and transportation options related to modernizing and innovating K-12 student transportation. Recommendations may include electric transportation and charging infrastructure.

(Reference Arizona Revised Statutes 28-900 and 28-3053)

Electric School Bus Purchase Authorization

School districts may establish contracts for vehicles and other transportation services as an alternative to maintaining and operating a transportation program. A school district may select a pre-approved or private contractor that:

• Provides electric school buses, electric school bus infrastructure, charging and charging management services, or electric school bus services; and,
• Is approved by the Arizona School Bus Advisory Council.

(Reference Arizona Revised Statutes 15-923 and 28-3053)

Hydrogen Fuel Production Support

The Hydrogen Study Committee (Committee) must evaluate existing state and federal laws, regulations, and funding sources for hydrogen fuel and recommend legislation related to the production, use, distribution, and storage of hydrogen. The Committee must review the following topics:

• The impacts of hydrogen production from various fuel sources;
• The construction of a dedicated hydrogen pipeline for transportation fuel;
• Long-term opportunities for carbon capture and sequestration;
• Streamlined permitting processes for hydrogen facilities and infrastructure;
• Cost-effective industrial rates for hydrogen production;
• Safety standards regarding the production, use, distribution and storage of hydrogen by state agencies; and
• Economic impacts of the potential hydrogen value chain in Arizona.

The Committee must submit a report of their evaluation and recommendations to the Arizona legislature by September 1, 2023.

(Reference Senate Bill 1396, 2022)