INNOVATIVE MOTOR VEHICLE CREDIT
Colorado allows an income tax credit to taxpayers who have purchased an alternative fuel vehicle, converted a motor vehicle to use alternative fuel, or have replaced a vehicle’s power source with an alternative fuel power source. To
qualify, the vehicle must be titled and registered in Colorado. [§39-22-516.5, C.R.S.]
Innovative Motor Vehicles Definitions;
As used for vehicles purchased or
converted during tax years beginning on or after January 1, 2012 but prior to January 1, 2016:
"Actual cost incurred" means the actual cost paid by the purchaser for the vehicle, conversion, or idling reduction technologies. The actual cost paid shall be calculated as the net of any credits, grants, or rebates, including federal credits, grants, or rebates for which the purchaser is eligible, but excluding the credit specified in this section.
"Alternative fuel" means an alternative fuel as defined in [§25-7-106.8 (1) (a), C.R.S.]
"Category 1" means a motor vehicle that complies with bin 1 of the federal Tier 2 emissions standards published by the federal Environmental Protection Agency in the federal register at 65 FR 6698 (February 10, 2000), as amended.
"Category 2" means light duty passenger vehicle diesel-electric hybrids with a minimum fuel economy of seventy
miles per gallon.
"Category 3" means light duty passenger vehicle, light duty truck, and medium duty truck diesel-electric hybrid conversions that increase the fuel economy of the original motor vehicle by forty percent or more.
"Category 4" means light duty passenger vehicle, light duty truck, and medium duty truck compressed natural gas conversions certified by the United States Environmental Protection Agency and original equipment manufacturer compressed natural gas vehicles.
"Category 5" means any idling reduction technologies.
"Category 6" means a motor vehicle that complies with bin 2 or bin 3 of the federal Tier 2 emissions standards published by the federal environmental protection agency in the federal register at 65 FR 6698 (February 10, 2000), as amended, with a minimum fuel economy of forty miles per gallon or miles per gallon gasoline equivalent or
greater.
“Gross vehicle weight rating” or "GVWR" shall have the same meaning as set forth in §42-2-402 (6), C.R.S.
“Hybrid vehicle” means a motor vehicle with a hybrid propulsion system that operates on both electricity and an alternative fuel or traditional fuel.
“Idling reduction technologies” means idling reduction devices or advanced insulation, as those terms are defined in section 4053 of the internal revenue code, as amended, exempt from federal excise tax pursuant to said section 4053.
“Light duty passenger vehicle” means a private passenger vehicle, including vans, capable of seating twelve passengers or less; except that the term does not include motor homes as defined in [§42-1-102 (57), C.R.S.], or vehicles designed to travel on three or fewer wheels in contact with the ground.
“Light duty truck” means a truck between zero and fourteen thousand pounds GVWR.
“Medium duty truck” means a truck with a gross vehicle weight rating greater than fourteen thousand pounds up to twenty-six thousand pounds.
“Miles per gallon gasoline equivalent” means the standard unit of measure that measures how many miles an alternative vehicle can travel on the equivalent energy of one United States gallon of traditional fuel.
“Motor vehicle” means any self-propelled vehicle, including a vehicle that uses a hybrid propulsion system, that is:
(I) Titled and registered in the state; and
(II) required to be licensed or subject to licensing for operation upon the highways of the state.
"Plug-in hybrid electric vehicle" means:
(I) An original equipment manufacturer plug-in hybrid electric vehicle that can operate solely on electric
power and that is capable of recharging its battery from an on-board generation source and an off-board
electricity source; and
(II) A plug-in hybrid electric vehicle conversion that provides an increase in city fuel economy of seventy-five percent or more as compared to a comparable non-hybrid version vehicle for a minimum of twenty miles and that is capable of recharging its battery from an on-board generation source and an off-board electricity source. A vehicle shall be comparable if it is the same model year and the same vehicle class
as established by the United States environmental protection agency and is comparable in weight, size, and use. Fuel economy comparisons shall be made using city fuel economy standards in a manner that is substantially similar to the manner in which city fuel economy is measured in accordance with procedures set forth in 40 CFR 600, as in effect on August 8, 2005.
“Power source” means the engine or motor and associated wiring, fuel lines, engine coolant system, fuel storage containers, and miscellaneous components.
“Traditional fuel” means a petroleum-based motor fuel commonly used on the highways of the state in the year 2008.
“Uses an alternative fuel" or "to use an alternative fuel" means to operate solely on an alternative fuel, to operate on both an alternative fuel and a traditional fuel, or to operate alternately on a traditional fuel and an alternative fuel.
Tax Credits for Innovative Motor Vehicles [§39-22-516,.5 C.R.S.]
For income tax years commencing on or after January 1, 2012, but prior to January 1, 2016, there shall be allowed to any person a credit against the tax imposed by this article, not to exceed $6,000, for each motor vehicle owned by
such person that:
(I) uses or is converted to use an alternative fuel;
(II) is a hybrid vehicle;
(III) is a plug-in hybrid electric vehicle;
(IV) has its power source replaced with a power source that uses an alternative fuel; or
(V) is modified to include idling reduction technology.
For income the tax years commencing on or after January 1, 2012, but prior to January 1, 2016, there shall be allowed to any person a credit against the tax imposed by this article, not to exceed $7,500, for each motor vehicle owned by such person that is converted to a plug-in hybrid electric vehicle.
The amount of the credit allowed shall be an amount equal to the percentage as set forth in the following:
a) The difference between the actual cost incurred by such person during the tax year in purchasing a motor vehicle that uses an alternative fuel and the cost of the same motor vehicle that uses a traditional fuel or, if the same
vehicle is not available, then the cost of the most similar vehicle, taking into account the model, make, engine size, and options, that uses a traditional fuel;
b) The difference between the actual cost incurred by such person during the tax year in replacing an existing power source in a motor vehicle that uses a traditional fuel with a power source that uses an alternative fuel and the cost of replacing the existing power source in the motor vehicle with the same type of power source that uses
a traditional fuel;
c) The actual cost incurred by such person during the tax year in converting the motor vehicle to a fuel system that uses an alternative fuel;
d) The actual cost incurred by such person in purchasing idling reduction technologies; or
e) (I) The actual cost incurred by such person during the tax year in converting a hybrid vehicle to a plug-in hybrid
electric vehicle.
(II) Persons who claimed a tax credit in previous years for the purchase of model year 2004 and newer hybrid
vehicles are eligible to claim an additional credit for the conversion of such a hybrid vehicle to a plug-in hybrid
electric vehicle.
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