Search Federal and State Laws and Incentives

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 and use tax. Exempt vehicles include vehicles certified to federal LEV standards that have a gross vehicle weight rating (GVWR) of over 26,000 pounds (lbs.). The exemption also applies if the GVWR is greater than 10,000 lbs. and if the vehicle, power source, or parts used for converting the power source meet the definition of a category 4, 4A, 4B, 4C, 7, or 7A truck, as defined in Colorado Revised Statutes 39-22-516.8. 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)

Alternative Fuel Vehicle (AFV) Weight Exemption

Gross vehicle weight rating limits for AFVs are 2,000 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. For the purpose of this exemption, alternative fuel is defined as compressed natural gas, propane, ethanol, or any mixture containing 85% or more ethanol (E85) with gasoline or other fuels, electricity, or any other fuels, which may include clean diesel and reformulated gasoline, so long as the Colorado Air Quality Control Commission determines that these other fuels result in comparable reductions in carbon monoxide emissions and brown cloud pollutants. (Reference Colorado Revised Statutes 42-4-508 and 25-7-106.8)

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, see the Colorado Department of Revenue Division of Motor Vehicles website. (Reference Colorado Revised Statutes 42-3-113)

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 through the Charge Ahead Colorado program to support PEV and EVSE adoption by individual drivers and fleets. Both CEO and RAQC grants will fund 80% of the cost of EVSE, up to $6,000 for a fleet-only Level 2 station, $9,000 for a dual port Level 2 station, up to $30,000 for a direct current (DC) fast charging EVSE, and up to $50,000 for a charging station capable of 100kW or higher charging. Eligible DC fast EVSE must have both CHAdeMO and SAE CCS J1772 connectors and be capable of providing at least 50 kilowatts to one vehicle.

CEO administers grants outside the Denver Metro Area while RAQC administers grants inside the Denver Metro Area. RAQC also provides funding for 80% of the incremental cost for qualified PEVs, up to $8,260. Eligible EVSE applicants are local governments, including school districts; state/federal agencies; public universities; public transit agencies; private non-profit or for-profit corporations; landlords of multi-family apartment buildings; and owners associations of common interest communities. For vehicle funding, priority will be given to organizations that are excluded from the Colorado Innovative Motor Vehicle Credit. Criteria and eligibility differ depending on which agency provides funding. For more information, including application deadlines, see the Charge Ahead Colorado Grant Application website.

Low-Speed Electric Vehicle (EV) Access to Roadways

A low-speed EV is self-propelled 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 mph or less. Regardless, a low-speed EV may directly cross any roadway with a speed limit greater than 35 mph.

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

Alternative Fuel Tax

Compressed natural gas (CNG), liquefied natural gas (LNG), and propane are subject to excise tax imposed on a per gallon basis as follows:

Plug-In Electric Vehicle (PEV) Fee

PEV owners must pay an annual fee of $50, in addition to other registration fees, for a PEV decal. Fees contribute to the Highway Users Tax Fund and the Electric Vehicle Grant Fund, which provides grants for EVSE. (Reference Colorado Revised Statutes 42-3-304)

Alternative Fuel Vehicles and Infrastructure Grant Program

The Colorado Energy Office (CEO), the Regional Air Quality Council (RAQC), and the Colorado Department of Transportation (CDOT), have partnered to provide grants through the ALT Fuels Colorado program for new, publicly accessible compressed natural gas (CNG) fueling equipment; co-located electric vehicle charging and propane station equipment at funded CNG stations; and CNG, and electric vehicles. CNG must be 100% renewable natural gas. CEO will administer the station grants to advance infrastructure development along major state-wide transportation corridors. RAQC will administer the vehicle grants for fleets operating within counties with air quality nonattainment and maintenance areas. For more information, including application deadlines and annual award amounts, see the Clean Air Fleets ALT Fuels Colorado website.

Idle Reduction Weight Exemption

Any motor vehicle equipped with a qualified auxiliary power unit or idle reduction technology may exceed the state's gross, total axle, or bridge formula vehicle weight limits by up to 550 pounds to compensate for the additional weight of the idle reduction technology. To be eligible for the weight exemption, the vehicle operator must be able to provide written proof of idle reduction technology weight and demonstrate or certify that it is fully functional at all times. (Reference 8 Code of Colorado Regulations 1507-28)

Electric Vehicle (EV) and Infrastructure Coaching Service

The Colorado Energy Office's ReCharge Colorado program (ReCharge) works to advance the adoption of EVs and installation of charging infrastructure in Colorado. ReCharge provides coaching services to consumers, local governments, workplaces, and multi-unit housing developments to help them identify monetary savings, grant opportunities, and other EV benefits. ReCharge also helps build local stakeholder support for EVs. For more information, see the ReCharge Colorado website.

Electric Vehicle Emissions Inspection Exemption

Vehicles powered exclusively by electricity are exempt from state motor vehicle emissions inspections. For more information, see the Air Care Colorado website. (Reference 1 Code of Colorado Regulations 204-11 Rule 2)

Plug-In Electric Vehicle (PEV) Tax Credit

Qualified all-electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) titled and registered in Colorado are eligible for a tax credit. Light-duty PEVs purchased, leased, or converted before January 1, 2026, are eligible for a tax credit equal to the amounts below:

The credit amount for any qualifying truck is limited to the difference in manufacturer's suggested retail price between the qualifying truck and a comparable truck that operates on either gasoline or diesel fuel. The credit that may be claimed for converting a truck to a qualifying truck is limited to the cost of conversion.

Eligible purchased vehicles must be new, and eligible leased vehicles must have a lease term of not less than two years. A purchaser may assign the tax credit generated through the purchase, lease, or conversion to any of the above categories of vehicle to the financing entity, allowing the purchaser to realize the value of the tax credit at the time of purchase, lease, or conversion. The financing entity may collect an administrative fee of no more than $150.

For more information, see the Colorado Department of Revenue's Income 69 FYI publication.

(Reference Colorado Revised Statutes 39-22-516.7 and 39-22-516.8)

Alternative Fuel Vehicle (AFV) Tax Credit

AFVs titled and registered in Colorado are eligible for a tax credit. For the purpose of the credit, AFVs are defined as dedicated or bi-fuel natural gas and propane vehicles. The tax credit is equal to the amounts listed below:

Eligible purchased vehicles must be new, and eligible leased vehicles must have a lease with a term of not less than two years. A purchaser may assign the tax credit generated through the purchase, lease, or conversion to any of the above categories of vehicle to the financing entity, allowing the purchaser to realize the value of the tax credit at the time of purchase, lease, or conversion. The financing entity may collect an administrative fee of no more than $150.

For more information, see the Colorado Department of Revenue's Income 69 and Income 70FYI publications.

(Reference Colorado Revised Statutes 39-22-516.7 and 39-22-516.8)

Fuel Reduction Technology Tax Credit

Fuel reduction technologies are eligible for a tax credit equal to a percentage of the actual cost paid for the technology. The actual cost paid must account for eligible federal credits, grants, or rebates.

A purchaser of a converted hydraulic hybrid trailer may assign the tax credit to the financing entity, allowing the purchaser to realize the value of the tax credit at the time of conversion. The financing entity may collect an administrative fee of no more than $150.

For more information, including maximum credit amounts, see the Colorado Department of Revenue's Income 70 FYI publication.

(Reference Colorado Revised Statutes 39-22-516.7 and 39-22-516.8)

Direct Current (DC) Fast Charging Plazas Program

The Colorado Energy Office (CEO) is accepting applications for the ALT Fuels Colorado Electric Vehicle (EV) DC Fast Charging Plazas Program. Priority locations are near downtown areas, high-density housing, commercial developments, transit hubs, and transportation network company dense areas. Awardees must provide five years of continuous use. Eligible applicants may receive grants up to 80% of project costs at each proposed location. There will be two rounds of funding, and total funding will not exceed $4,000,000. First round applications are due by September 30, 2020. For additional information, including requirements, see the CEO EV DC Fast Charging Plazas Program website.

Non-Residential Electric Vehicle Supply Equipment (EVSE) Rebate – Black Hills Energy

Black Hills Energy offers non-residential customers rebates for the purchase and installation of Level 2 and publicly available direct current (DC) fast EVSE. Rebates are available in the following amounts: