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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 $6,000 for passenger vehicles and more for trucks.  For additional information, consult a dealership or this Issue Brief.  The tax credit is set to expire on January 1, 2022.  The table below outlines the tax credits for qualifying vehicles.

State Income Tax Credits for Alternative Fuel Vehicles

Vehicle Type

Vehicle Type

Tax Year 2018

Tax Year 2019

Tax Year 2020

Tax Year 2021

Purchased

alternative fuel vehicle

Passenger Vehicles

$5,000

$5,000

$4,000

$2,500

Light duty trucks*

$7,000

$7,000

$5,500

$3,500

Medium duty trucks**

$10,000

$10,000

$8,000

$5,000

Heavy duty trucks***

$20,000

$20,000

$16,000

$10,000

Leased

alternative fuel vehicle

Light duty trucks*

$3,500

$3,500

$2,750

$1,750

Medium duty trucks**

$5,000

$5,000

$4,000

$2,500

Heavy duty trucks***

$10,000

$10,000

$8,000

$5,000

Passenger Vehicles

$5,000

$5,000

$4,000

$2,500

Converted

alternative fuel vehicle

Passenger Vehicles

$5,000

$5,000

$4,000

$2,500

Light duty trucks*

$7,000

$7,000

$5,500

$3,500

Medium duty trucks**

$10,000

$10,000

$8,000

$5,000

Heavy duty trucks***

$20,000

$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 14,000 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.