Alternative Fuel Tax Credit
Alternative fuel vehicles titled and registered in Colorado are eligible for a tax credit. For the purpose of the credit, alternative fuels vehicles include dedicated or bi-fuel natural gas, propane, and hydrogen vehicles. Through December 31, 2016, purchased or leased vehicles are eligible for 18% of the actual cost of the vehicle, while converted vehicles are eligible for 55% of the actual cost of the conversion. The actual cost paid must account for federal credits, grants, or rebates; therefore taxpayers must subtract credits, grants, or rebates amounts before applying the percentage calculations. The tax credit is capped based on vehicle type in the amounts listed:
| Category | Cap per income tax year |
|---|---|
| Light-duty passenger motor vehicle | $6,000 |
| Light-duty truck | $7,500 |
| Medium-duty truck | $15,000 |
| Heavy-duty truck | $20,000 |
For more information, see the Colorado Department of Revenue's Income 67 FYI publication.
Beginning January 1, 2017, the tax credit will be applied in the amounts below:
| Category | 2017-2019 | 2020 | 2021 |
|---|---|---|---|
| Light-duty passenger motor vehicle | $5,000 for purchase or conversion; $2,500 for lease | $4,000 for purchase or conversion; $2,000 for lease | $2,500 for purchase or conversion; $1,500 for lease |
| Light-duty truck | $7,000 for purchase or conversion; $3,500 for lease | $5,500 for purchase or conversion; $2,750 for lease | $3,500 for purchase or conversion; $1,750 for lease |
| Medium-duty truck | $10,000 for purchase or conversion; $5,000 for lease | $8,000 for purchase or conversion; $4,000 for lease | $5,000 for purchase or conversion; $2,500 for lease |
| Heavy-duty truck | $20,000 for purchase or conversion; $10,000 for lease | $16,000 for purchase or conversion; $8,000 for lease | $10,000 for purchase or conversion; $5,000 for lease |
Also beginning January 1, 2017, 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.
(Reference House Bill 16-1332, 2016, and Colorado Revised Statutes 39-22-516.5, 39-22-516.7, and 39-22-516.8)