Colorado Incentives and Laws

Last Updated June 2006

State Incentives

10-25-2007. We finally have an answer to incentives concerning E85 conversions. When a vehicle is converted to flex fuel, it will not qualify for any incentive. A vehicle would need to be converted to a specific alternative fuel and then appropriately rated by the EPA as a LEV, ULEV, SULEV or ZEV in order to qualify for any type of state or federal incentive or tax credit. Flex vehicles are able to run gasoline so they will currently never qualify according to Colorado's Governor’s Coalition on Bio Fuels .

High Occupancy Vehicle (HOV) Lane Exemption

Vehicles that meet the definition of the EPA Inherently Low Emission Vehicle (ILEV) classification and have a gross vehicle weight rating of 26,000 pounds or less may be operated upon HOV lanes regardless of the number of occupants and without payment of a special toll or fee. A special sticker must be obtained from the state Department of Transportation. At this time, hybrid electric vehicles do not qualify as ILEVs due to the use of conventional gasoline fuel and cannot receive the HOV exemption decal. (Reference Colorado Revised Statutes 42-4-1012)

Point of Contact

Teresa Carrillo
Commercial Vehicle Operations Manager
Colorado Department of Transportation
Phone (303) 757-9716
Fax (303) 757-9719
teresa.carrillo@dot.state.co.us
 

Low Emission Vehicle (LEV) Sales Tax Exemption

Vehicles, vehicle power sources, or parts used for converting a vehicle power source certified to federal LEV standards or better are exempt from state sales tax. This exemption applies to vehicles, power sources, or parts for vehicles over 10,000 pounds gross vehicle weight rating. (Reference Colorado Revised Statutes 39-26-719)

Alternative Fuel Refueling Infrastructure Tax Credit

For tax years beginning prior to January 1, 2011, the Colorado Department of Revenue offers an income tax credit for the actual cost of construction, reconstruction, or acquisition of an alternative fuel refueling facility that is directly attributable to the storage, compression, charging, or dispensing of alternative fuels to motor vehicles. The credit value is as follows:

For an alternative fuel refueling facility that will be generally accessible for use by the public, in addition to the person claiming the credit, the percentages specified above will be multiplied by 1.25. For an alternative fuel refueling facility that dispenses an alternative fuel derived from a renewable energy source, the credit percentages specified above will be multiplied by 1.25 and requires certification that at least 70% of the alternative fuel dispensed annually is derived from a renewable energy source for a period of 10 years. The credit has a maximum value of $400,000 in any consecutive five-year period for each refueling facility. (Reference Colorado Revised Statutes 39-22-516)

Point of Contact

Tax Information Call Center
Colorado Department of Revenue
Phone (303) 238-7378
http://www.revenue.state.co.us/main/home.asp
 

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Tax Credit

An income tax credit is available from the Colorado Department of Revenue for the incremental cost of purchasing an AFV or for the conversion of a vehicle to operate using an alternative fuel. HEVs also qualify for this incentive. This credit is only available in the year during which the vehicle was purchased or converted, and a vehicle can qualify for this credit only one time. For an AFV purchase or conversion that permanently replaces a motor vehicle or power source that is ten or more years old , the percentage specified in the table below is doubled, up to a maximum of 100% of the incremental or conversion cost. To the extent the allowable credit exceeds the person's tax liability for that year, the excess may be carried forward for up to five years. Lessees or lessors of qualifying vehicles are also eligible for the credit. The value of the credit is based on the EPA emissions classification of the vehicle as follows:

Tax credits for Model Year 2006 HEVs are as follows:

Currently, the following Model Year 2007 HEVs have been approved for the income tax credits. For updates and historical credit information, please visit www.revenue.state.co.us/fyi/html/income09.html.

Neighborhood electric vehicles (NEVs) do not qualify for the AFV credit since they cannot be operated on Colorado highways.

(Reference Colorado Revised Statutes 39-22-516)

Point of Contact

Tax Information Call Center
Colorado Department of Revenue
Phone (303) 238-7378
http://www.revenue.state.co.us/main/home.asp
 

Alternative Fuel Vehicle (AFV) Rebate

A rebate is available from the Colorado Department of Revenue for the purchase of an AFV or for the conversion of a vehicle to operate using an alternative fuel. Vehicles must be owned by the State of Colorado, a political subdivision of the state, or a tax-exempt organization, and be used in connection with the official activities of the entity. HEVs also qualify for this incentive. The rebate is a percentage of the incremental cost if used toward purchasing a new AFV, or is a percentage of the conversion cost if used towards the cost of converting a vehicle to operate using an alternative fuel. For an AFV purchase or conversion that permanently replaces a motor vehicle or power source that is ten or more years old, the percentage specified in the table below is doubled, up to a maximum of 100% of the incremental or conversion cost. Each qualified entity is limited to $350,000 per state fiscal year in total rebates paid. The rebate value is as follows:

(Reference Colorado Revised Statutes 39-33-101 through 39-33-106)

State Laws and Regulations

Gasoline Gallon Equivalent Definition

The term 'gasoline gallon equivalent' is defined to equate the energy content of any motor fuel, including alternative fuels, to that of a gallon of gasoline. Any dispenser used for the sale of motor fuel in gasoline gallon equivalents shall display gasoline gallon equivalents as the primary display information provided. (Reference Colorado Revised Statutes 8-20-232.5)

Alternative Fuels Tax and Vehicle Decal

Fuel tax exemptions are granted for compressed natural gas (CNG) and liquefied petroleum gas (LPG) vehicle owners. Owners of CNG and LPG-fueled vehicles are required to purchase an annual tax decal for $70, $100, or $125 based on the vehicle's gross vehicle weight rating. All CNG and LPG vehicles must display a current fuel tax decal. Non-profit transit agencies are exempt from the fuel tax. (Reference Colorado Revised Statutes 39-27-102.5)

Alternative Fuel Vehicle (AFV) Weight Limit Exemption

Gross vehicle weight rating limits for AFVs are 1,000 pounds greater than corresponding conventional vehicles when the AFVs are operated on a highway that is not on the interstate system. (Reference Colorado Revised Statutes 42-4-508)

Alternative Fuel Use Requirement

By January 1, 2007, the Executive Director of the state Department of Personnel must adopt a policy that requires all state-owned diesel vehicles and equipment to be fueled with a fuel blend of 20% biodiesel and 80% petroleum diesel (B20), subject to the availability of the fuel and so long as the price is no greater than $0.10 more per gallon than the price of conventional diesel. Biodiesel is defined as fuel composed of mono-alkyl esters of long chain fatty acids derived from plant or animal matter that meets ASTM specifications and that is produced in Colorado. Additionally, the Executive Director must, by July 10, 2010, adopt a policy requiring that at least 10% of all state-owned bi-fuel vehicles be fueled exclusively with an alternative fuel. (Reference Senate Bill 16, 2006, and Colorado Revised Statutes 24-30-1104)

Alternative Fuel Vehicle (AFV) Registration

Upon the registration of a motor vehicle with the state Department of Revenue, Division of Motor Vehicles, the vehicle owner must report the types of alternative fuel used by the vehicle and whether the vehicle is dual-fueled or dedicated to one alternative fuel. Forms provided by the Department of Revenue for the purpose of registering motor vehicles must include space for the following fuel types: gasoline, diesel, propane, electricity, natural gas, methanol or M85, ethanol or E85, biodiesel, and other. (Reference Colorado Revised Statutes 42-3-113)

Idle Reduction Requirement

Idling of any vehicle for more than 10 minutes in any one-hour period is prohibited within the city and county of Denver. Exemptions apply for the following: when ambient outside air temperatures have been less than 20 degrees Fahrenheit for the previous 24 hours; current ambient outside air temperature are less than 10 degrees Fahrenheit; emergency vehicles; vehicles engaged in traffic operations; vehicles which are being serviced; vehicles that must idle to operate auxiliary equipment; vehicles en route to a destination that are stopped by traffic congestion. (Reference Revised Municipal Code, City and County of Denver, Section 4-43)

Utilities/Private Incentives

Natural Gas Fuel Rate Reduction and Infrastructure Maintenance

Clean Energy Fuels offers services for the natural gas vehicle industry that include compressed natural gas (CNG) refueling station equipment maintenance and competitive fuel pricing for larger fleet customers. Clean Energy also operates public CNG refueling stations in Colorado.

Point of Contact

James Orsulak
Market Manager for Alternative Fuels
Clean Energy Fuels
Phone (303) 322-4600
Fax (303) 322-4644
jorsulak@cleanenergyfuels.com
 

Natural Gas Infrastructure Technical Assistance

Atmos Energy offers preliminary feasibility studies for compressed natural gas (CNG) refueling stations and vendor selection on a case-by-case basis.

Point of Contact

Walter C. Miller
Energy Services Consultant
Atmos Energy
Phone (817) 303-2903
Fax (817) 303-2929
walter.c.miller@atmosenergy.com
 

Colorado Points of Contact: