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Alternative Fuel Vehicle Tax Credits

Since 1992, Colorado has offered the innovative motor vehicle income tax credit for people who purchase or lease alternative fuel vehicles, or who convert their existing vehicle to run on an alternative fuel source.  Qualifying vehicle types include electric vehicles, plug‑in hybrid electric vehicles, liquefied petroleum gas (LPG) vehicles, and compressed natural gas (CNG) vehicles.  The credit is worth up to $5,000 for passenger vehicles and more for trucks.  For additional information, consult a dealership or this Legislative Council Staff Issue Brief.  The tax credit for most innovative fuel vehicles is set to expire on January 1, 2022.  The table below outlines the tax credits for qualifying vehicles.

State Income Tax Credits for Innovative Fuel Vehicles

Vehicle Type

Vehicle Type

Tax Year 2019

Tax Year 2020

Tax Year 2021

Purchased alternative fuel vehicle

Passenger Vehicles

$5,000

$4,000

$2,500

Light duty trucks*

$7,000

$5,500

$3,500

Medium duty trucks**

$10,000

$8,000

$5,000

Heavy duty trucks***

$20,000

$16,000

$10,000

Leased

alternative fuel vehicle

Light duty trucks*

$3,500

$2,750

$1,750

Medium duty trucks**

$5,000

$4,000

$2,500

Heavy duty trucks***

$10,000

$8,000

$5,000

Passenger Vehicles

$2,500

$2,000

$1,500

Converted  alternative fuel vehicle

Passenger Vehicles

$5,000

$4,000

$2,500

Light duty trucks*

$7,000

$5,500

$3,500

Medium duty trucks**

$10,000

$8,000

$5,000

Heavy duty trucks***

$20,000

$16,000

$10,000

Source: Sections 39-22-516.7 and 39-22-516.8, C.R.S.
 *  Light duty electric trucks have a gross vehicle weight rating (GVWR) of less than 10,000 lbs..
 ** Medium duty electric trucks have a GVWR of 10,000 pounds to 26,000 pounds.
 *** Heavy duty electric trucks have a GVWR of 26,000 pounds or more.
 

Extension for electric vehicles.  The tax credit for electric and plug-in hybrid electric passenger vehicles and trucks, and the credit for hydrogen passenger vehicles, by extending the credit expires January 1, 2026.  For additional information, consult a dealership or this Legislative Council Staff memorandum.  The table below outlines the tax credits for electric vehicles.

State Income Tax Credits for Electric Vehicles

Tax Year

2020

2021

2022

2023

2024

2025

Electric Passenger Vehicles

Purchase Vehicles

Leased Vehicles

 

$4,000

$2,000

 

$2,500

$1,500

 

$2,500

$1,500

 

$2,000

$1,500

 

$2,000

$1,500

 

$2,000

$1,500

Light Duty Electric Truck

Purchased Vehicles

Lease Vehicles

 

$5,500

$2,750

 

$3,500

$1,750

 

$3,500

$1,750

 

$2,800

$1,750

 

$2,800

$1,750

 

$2,800

$1,750

Medium Duty Electric Truck

Purchase Vehicles

Leased Vehicles

 

$8,000

$4,000

 

$5,000

$2,500

 

$5,000

$2,500

 

$4,000

$2,500

 

$4,000

$2,500

 

$4,000

$2,500

Heavy Duty Electric Truck

Purchased Vehicles

Leased Vehicles

 

$16,000

$8,000

 

$10,000

$5,000

 

$10,000

$5,000

 

$8,000

$5,000

 

$8,000

$5,000

 

$8,000

$5,000

Source: Legislative Council Staff

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