Arizona Incentives and Laws

Last Updated May 2006

State Incentives

High Occupancy Vehicle (HOV) Lane Exemption

AFVs are required to display special license plates. Once these plates are displayed, dedicated AFVs are allowed to use the high occupancy vehicle (HOV) lanes, regardless of the number of passengers. A $28 administration fee applies. If the Arizona Department of Transportation receives approval from the federal government allowing the use of HOV lanes by hybrid electric vehicles (HEVs), a person may also drive a HEV with AFV special plates or an AFV sticker, and a HEV sticker in HOV lanes at any time, regardless of occupancy level, without penalty. HEVs must meet specific requirements, including the U.S. Environmental Protection Agency ultra-low emission vehicle (ULEV) standard pursuant to 40 Code of Federal Regulations section 88.104-94. Action enabling HEVs to qualify for the AFV special plates in the state has not yet been established. (Reference Arizona Revised Statutes 28-2416 and 28-737B)

Point of Contact

Arizona Department of Transportation, Motor Vehicle Division Customer Call Center
Phone (602) 255-0072 (Phoenix), (520) 629-9808 (Tucson), or (800) 251-5866 (elsewhere in Arizona)
 

Electric Vehicle (EV) Equipment Tax Credit

A tax credit up to $75 is available to individuals for the installation of EV recharging outlets in a house constructed by a taxpayer. (Reference Arizona Revised Statutes 43-1090 and 43-1176)

State Laws and Regulations

Alternative Fuel Vehicle (AFV) License Tax

The initial annual vehicle license tax on an AFV is lower than the license tax on conventional vehicles. The vehicle license tax on an AFV is $4 for every $100 in assessed value. The assessed value of the AFV is determined as follows: during the first year after initial registration, the value of the AFV is 1% of the manufacturer's base retail price (as compared to 60% for conventional vehicles); during each succeeding year, the value of the AFV is reduced by 15%. The minimum amount of the license tax is $5 per year for each motor vehicle subject to the tax. (Reference Arizona Revised Statutes 28-5805 and 28-5801)

Alternative Fuel Vehicle (AFV) Parking

A person who is driving a vehicle powered by an alternative fuel may park without penalty in parking areas that are designated for carpool operators. (Reference Arizona Revised Statutes 28-877).

Neighborhood Electric Vehicle (NEV) Access to Roadways

Neighborhood electric vehicles (NEVs) may not operate at a speed faster than 25 miles per hour (mph) and may only be used on roads that have a posted speed limit of less than 35 mph. 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)

Alternative Fuel Vehicle (AFV) Dealers Information Dissemination Requirement

New motor vehicle dealers are required to make information on AFVs and incentives in Arizona for purchasing or leasing AFVs available to the public. (Reference Arizona Revised Statutes 28-4414)

Electric Vehicle (EV) Parking

A person shall not stop, stand, or park a motor vehicle within any parking space specially designated for parking and recharging EVs unless the motor vehicle is an EV and has been issued an AFV special plate or sticker. A person who is found responsible for a violation of this is subject to a civil penalty of at least $350. Reference Arizona Revised Statutes 28-876)

Alternative Fuel Vehicle (AFV) Emissions Test Requirement

All AFVs, except electric, solar and hydrogen vehicles, registered in or used to commute into the metro Phoenix or metro Tucson areas are required to have emissions testing before the vehicle can be registered. An alternate fee may be paid for Model Year 2003 and newer Original Equipment (OEM) AFVs instead of having the emissions test performed. New AFVs being registered for the first time are not required to be tested, but emissions testing will be required before registration in subsequent years. For more information, please visit the Arizona Department of Environmental Quality Web site. (Reference Arizona Revised Statutes 49-542)

Alternative Fuel Vehicle (AFV) Special License Plate

AFVs must display an AFV license plate. State or agency directors who conduct activities of a confidential nature and have a vehicle powered by an alternative fuel are exempt from the requirement of displaying an AFV special license plate. The Arizona Department of Transportation has the authority to issue regular plates to AFVs that are used by law enforcement and the federal government. (Reference Arizona Revised Statutes 28-2511 and 38-538.03B)

Idle Reduction Requirement

Heavy-duty diesel vehicles operated in Maricopa County with a gross vehicle weight rating of more than 14,000 pounds must limit idling time to no more than five minutes. Exemptions apply for emergency vehicles, certain traffic or weather conditions, certain driver accommodations, and idling necessary for refrigeration equipment. . (Reference Arizona Revised Statutes 11-876 and Maricopa County Vehicle Idling Restriction Ordinance)

Alternative Fuel and Alternative Fuel Vehicle (AFV) Tax Exemption

The Arizona use tax does not apply to the following: natural gas or liquefied petroleum gas used to propel a motor vehicle; AFVs, if the AFV was manufactured as a diesel fuel vehicle and converted to operate on an alternative fuel; and equipment that is installed in a conventional diesel fuel motor vehicle to convert the vehicle to operate on an alternative fuel. (Reference Arizona Revised Statutes 42-5159)

Liquefied Petroleum Gas (LPG) Device Fee

The Arizona Department of Weights and Measures collects license fees for LPG motor fuel measuring and fueling devices used for commercial purposes. (Reference Arizona Revised Statutes 41-2092)

Biodiesel Specifications

Biodiesel sold in Arizona must meet the American Society for Testing and Materials (ASTM) specifications D6751. Blends of biodiesel sold in Arizona must meet the D975 specifications established by ASTM. Blenders of biodiesel must submit monthly reports on the percentage of biodiesel in the final blend as well as verify the quality of biodiesel to the Director of the Department of Weights and Measures. A person who dispenses biodiesel must label the dispenser of the volume percentage of biodiesel in the final product. (Reference Arizona Revised Statutes 41-2083 and 41-2051)

Natural Gas School Bus Fund

For fiscal year 2005-2006, excess revenues received as a result of vehicle emissions inspection fee requirements are to be deposited in the state air quality fund for the purpose of awarding grants to school districts for the incremental cost of purchasing new natural gas school buses or to purchase/retrofit school buses with diesel particulate filters. (Reference House Bill 2591, 2006 and Arizona Revised Statutes 49-551)

Ethanol Specifications

Ethanol blenders and retailers must ensure that E85 blended or sold complies with ASTM specifications D5798-99. Fuel dispensers and pump nozzles for E85 must display a notice stating that the fuel is for use only in flexible fuel vehicles. Motor fuel producers must provide a report to the state Department of Weights and Measures including, but not limited to, the following information: the amount of E85 produced, used, or sold each month, and the fuel quality parameters of the ethanol and gasoline used in the blend. If all notices are displayed properly, a retail seller of E85 shall not be held liable if a consumer misfuels and places E85 in a non-flexible fuel vehicle. (Reference House Bill 2590, 2006 and Arizona Revised Statutes 41-2122.01)

Alternative Fuel Use and Acquisition Requirements

Local governments in defined areas of Maricopa, Pinal, Yavapai, and Pima counties with a population of more than 1,200,000 people are required to develop and implement a vehicle fleet plan for the purpose of encouraging and increasing the use of alternative fuels and clean burning fuels in vehicles owned by a city or town. For each year after December 21, 2000, at least 75% of the local government fleet must operate on alternative fuels and clean burning fuels. The fleet plans must include the use of alternative fuels and clean burning fuels in the bus fleet or regional public transportation authorities operated by covered locales, and all newly purchased buses must use alternative fuel or clean burning fuel. Furthermore, school districts with an average daily membership of more than 3,000 in defined areas of these counties are required to ensure that 50% of the portion of the fleet with a gross vehicle weight rating of at least 17,500 pounds operate on alternative or clean burning fuels, ultra low sulfur diesel, or meet specified emissions standards. Applications for waivers are available.

For and after model year 2001, 75% of new light-duty vehicles purchased by the state fleet must be capable of operating on alternative or clean burning fuels. For state and federal vehicles that operate primarily in counties with a population of more than 1,200,000 people, at least 90% of the total state and federal fleets must operate on alternative or clean burning fuels. Pertaining to the use of an alcohol-fueled vehicle, state agencies must demonstrate that the fuel for the vehicle is available within a 10-mile radius of the primary home base of that vehicle.For and after model year 2001, 75% of new light-duty vehicles purchased by the state fleet must be capable of operating on alternative or clean burning fuels. For state and federal vehicles that operate primarily in counties with a population of more than 1,200,000 people, at least 90% of the total state and federal fleets must operate on alternative or clean burning fuels. Pertaining to the use of an alcohol-fueled vehicle, state agencies must demonstrate that the fuel for the vehicle is available within a 10-mile radius of the primary home base of that vehicle.For and after model year 2001, 75% of new light-duty vehicles purchased by the state fleet must be capable of operating on alternative or clean burning fuels. For state and federal vehicles that operate primarily in counties with a population of more than 1,200,000 people, at least 90% of the total state and federal fleets must operate on alternative or clean burning fuels. Pertaining to the use of an alcohol-fueled vehicle, state agencies must demonstrate that the fuel for the vehicle is available within a 10-mile radius of the primary home base of that vehicle.

Vehicle acquisition credits may be earned as follows: 1) every 450 gallons of neat biodiesel (B100) or 2,250 gallons of a diesel fuel substitute is equivalent to one vehicle acquisition; 2) every 530 gallons of E85 is equivalent to one vehicle acquisition.

(Reference Arizona Revised Statutes 1-215, 9-500.04, 15-349, 41-803, 49-412, 49-541, 49-474.01, 49-571, 49-573, and Senate Bill 1346, 2006)

Utilities/Private Incentives

There are currently no known utility or private incentives offered in Arizona

Arizona Points of Contact: