Colorado Offers Tax Credit for Alternative Fuel Vehicles


The State of Colorado is offering an Innovative Motor Vehicle Credit of up to $6,000 to taxpayers who have purchased an alternative fuel vehicle, converted a motor vehicle to use an alternative fuel, or replaced a vehicle’s power source with an alternative fuel power source. An income tax credit of up to $7,500 is offered to those who have converted a vehicle to a plug-in hybrid electric vehicle.

Taxpayers must have purchased or converted a vehicle after December 31, 2011 and before January 1, 2016 to be eligible for the Innovative Motor Vehicle Credit.

Vehicles must meet one of the following criteria to qualify:

  • Uses or is converted to use an alternative fuel
  • Is a hybrid vehicle
  • Is a plug-in hybrid electric vehicle
  • Has its own power source replaced with a power source that uses an alternative fuel
  • Is modified to include idling reduction technology

The amount of credit allowed for each qualified vehicle is dependent upon a number of factors, which are detailed in the Department of Revenue’s (DOR) FYI Income 67 report. For more information regarding the Innovative Motor Vehicle Credit, please refer to the DOR report or contact the DOR call center at 303-238-7378.