Alternative Fuel Vehicle and Refueling - Personal Tax Credit

Summary

Under the provisions established by C.R.S. §39-22-516, tax credits are available for the purchase of an alternative fuel vehicle, for a motor vehicle converted to use alternative fuel, or for the replacement of the power source with a power source that uses alternative fuel. Tax credits are also available for the 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. Prior to July I, 2000 the credits only applied to vehicles used in connection with a business. For tax years beginning on or after July 1, 2000, alternative fuel vehicles used by individuals for personal use also qualify for this credit. Alternative fuel is defined as; natural gas, propane, ethanol, or any mixture ethanol containing 85% or more ethanol by volume with gasoline or other fuels, electricity, or any other fuels, which may include, but are not limited to, clean diesel and reformulated gasoline so long as these other fuels make comparable reductions in carbon monoxide emissions and brown cloud pollutants as determined by the air quality control commission. The credit is a percentage of: a. the difference between the cost of the vehicle and the cost of the same or most similar vehicle that uses a traditional fuel, or b. the cost incurred in converting the vehicle to an alternative fuel, or c. the difference between the cost of replacing the power source and the cost of the of the same or most similar power source that uses a traditional fuel. The percentage of the credit depends on the certification level of the vehicle and the year in which the expenditure is made. The certification levels are available through the Colorado Department of Revenue. Colorado's Alternative Fuel Refueling Facility Tax Credit, for tax years beginning on or after January 1, 1998, but prior to January 1, 2011, is available for the 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 percentage of the credit is as follows: Prior to 1/1/06 - 50%; Prior to 1/1/09 - 35%; Prior to 1/1/11 - 20%. The percentage of the credit will be increased by a multiple of 1.25 if either of the following occur: 1) If 70% or more of the alternative fuel dispensed each year by the refueling facility is derived from a renewable energy source for ten years (certification must be provided upon request); and/or 2) If the refueling facility is generally accessible for use by persons in addition to the person claiming the credit, The credit claimed by a taxpayer is limited to $400,000 in any consecutive five-year period for each refueling facility.