Search Federal and State Laws and Incentives

High Occupancy Vehicle (HOV) Lane Exemption

Alternative fuel vehicles (AFVs) displaying the Virginia Clean Special Fuel license plate may use Virginia HOV lanes on specified areas of I-64, I-264, the Dulles Toll Road, and in the City of Alexandria, regardless of the number of occupants. For HOV lanes serving the I-66 corridor, only registered vehicles displaying Clean Special Fuel license plates issued before July 1, 2011, are exempt from HOV lane requirements. Only dedicated AFVs are eligible; see the Virginia Department of Motor Vehicles website for a complete list of qualifying vehicles. The annual fee for Clean Special Fuel license plates is $25 in addition to the prescribed fee for commonwealth license plates. This exemption expires September 30, 2025. For more information, see the Virginia Department of Transportation HOV Lanes website. (Reference Virginia Code 33.2-501 and 46.2-749.3)

Alternative Fuel School Bus and Fueling Infrastructure Loans

The Virginia Board of Education may use funding from the Literary Fund to provide loans to school boards that convert school buses to operate on alternative fuels or construct alternative fueling stations. (Reference Virginia Code 22.1-146)

Alternative Fuel Vehicle (AFV) Tax Reduction Authorization

Local governments may reduce personal property taxes paid on AFVs and low-speed vehicles. AFVs include vehicles that operate using natural gas, liquefied petroleum gas or propane, hydrogen, or electricity. (Reference Virginia Code 58.1-3506)

Alternative Fuel and Vehicle Tax

Alternative fuels used to operate on-road vehicles are taxed at a rate of $0.212 per gasoline gallon equivalent (GGE). Alternative fuels are taxed at the same rate as gasoline and gasohol (5.1% of the statewide average wholesale price of a gallon of self-serve unleaded regular gasoline). Refer to the Virginia Department of Motor Vehicles (DMV) Fuels Tax Rates and Alternative Fuels Conversion website for fuel-specific GGE calculations.

Alternative Fuel Provider License

Alternative fuel providers, bulk users, and retailers, or any person who fuels an alternative fuel vehicle from a private source that does not pay the alternative fuels tax must obtain an alternative fuel license from the Virginia Department of Motor Vehicles (DMV). For more information, see the DMV Fuels Tax Licensing website. (Reference Virginia Code 58.1-2244)

Green Jobs Tax Credit

Qualified employers are eligible for a $500 tax credit for each new green job created that offers a salary of at least $50,000, for up to 350 jobs per employer. The credit is allowed for the first five years that the job is continuously filled. For the purposes of this tax credit, a green job is defined as employment in industries relating to renewable or alternative energy, including hydrogen and fuel cell technology, landfill gas, and biofuels. For more information, see the Virginia Department of Taxation website. (Reference Virginia Code 58.1-439.12:05)

Alternative Fuel and Hybrid Electric Vehicle (HEV) Emissions Testing Exemption

Vehicles powered exclusively by natural gas, propane, hydrogen, a combination of compressed natural gas and hydrogen, or electricity are exempt from the Virginia emissions inspection program. Qualified HEVs with U.S. Environmental Protection Agency fuel economy ratings of at least 50 miles per gallon (city) are also exempt from the emissions inspection program unless remote sensing devices indicate the HEV may not meet current emissions standards. For more information, including a list of HEVs that qualify, see the Virginia Department of Motor Vehicles Emissions Inspections website. (Reference Virginia Code 46.2-1177 through 46.2-1178 and 46.2-749.3)

Alternative Fuel Tax Exemption

Alternative fuel is exempt from taxes if it is sold to a government entity for its exclusive use, a non-profit charitable organization for the purpose of providing charitable services for low-income medical patients, or produced by an agricultural operation and used exclusively for farm use or vehicles of that producer. (Reference Virginia Code 58.1-2250)

Clean Transportation Technology Investment Funding - Center for Innovative Technology (CIT)

CIT’s Commonwealth Energy Fund (CEF) provides early-stage investment funds for Virginia-based technology, life science, and clean technology companies. Eligible clean transportation technologies may include vehicles, components, batteries, and fuel cells, in addition to biofuels. For more information, see the CEF website.

Government Alternative Fuel Vehicle (AFV) Incentive

The Virginia Department of Mines, Minerals and Energy, in collaboration with the Virginia Department of Transportation, offers up to $10,000 to state agencies and local governments for the incremental cost of new or converted AFVs. To be eligible, vehicles must comply with Buy America provisions or qualify for a waiver from the U.S. Department of Transportation Federal Highway Administration, and must be garaged in areas of air quality nonattainment, as recognized by the federal Congestion Mitigation and Air Quality Improvement (CMAQ) program. For more information, see the Virginia CMAQ Incentive Program website.

Zero Emission Vehicle (ZEV) Sales Requirement and Low-Emission Vehicle (LEV) Standards

The Virginia Air Pollution Control Board (Board) may adopt the California motor vehicle emissions and compliance requirements specified in Title 13 of the California Code of Regulations and create an Advanced Clean Cars Program. These regulations may apply to new vehicles with a gross vehicle weight rating of up to 14,000 pounds and may require manufacturers to meet the greenhouse gas emissions standard and the ZEV production and sales requirements. This program must be applicable to vehicles by model year 2025.

(Reference House Bill 1965, 2021, and Virginia Code 10.1-1307.04)

Alternative Fuel Vehicle Grant Authorization

Local governments are authorized to establish a green bank to promote investment in clean energy technologies, including alternative fuel vehicles and related infrastructure. (Reference House Bill 1919, 2021)