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REMINDER OF ALTERNATIVE FUEL STATE INCOME TAX CREDITS
As the popularity of hybrids and alternative fuel vehicles increases, a reminder of income tax credits for these vehicles seems appropriate. Many consumers who have now become interested in these vehicles due to rising gas prices may not even realize of the availability of tax credits. Dealership sales staff may want to ensure any consumers interested in alternative fuel vehicles are aware of these state income tax credits in assessing the car’s full value.
The Department of Revenue – Taxpayer Services Division has an FYI Publication, Alternative Fuel Income Tax Credits – FYI No. 9, available on this topic. http://www.revenue.state.co.us/fyi/pdf/income09.pdf
Note that the definition of “alternative fuel” is as follows:
“compressed natural gas, propane, methanol and ethanol, or any mixture thereof containing 85% or more of methanol or 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 computation of the tax credit is a percentage (ranging from 50 to 85% through the end of 2009) of “the difference between the cost of the vehicle and the cost of the same or most similar vehicle that uses a traditional fuel”. As of January 1, 2010, the percentages of the low and ultra-low emitting categories drop by half, and then expire at the end of 2011.
Note that at present, E-85 vehicles generally do not qualify for a tax credit because of the following comparison / finding when this FYI was published in December 2007:
“Furthermore, the cost of a flex fuel or dual fuel vehicle is the same as the most similar vehicle that can operate exclusively on traditional fuel, which results in a credit of $0 (e.g. most vehicles that can use E85 fuel or biodiesel).”
If this finding is no longer accurate, based on current market conditions, please contact us so that we can ensure the latest information is provided to the Taxpayer Services Division.
Other related information:
- Open Road, Jan. 24, 2007 article, Alternative fuel tax credit forms for consumers (CO-state) http://www.cadaopenroad.org/enewsletter/enews_archivesssss/enews_012407/index.htm
- Federal income tax credits http://www.fueleconomy.gov/feg/taxcenter.shtml
- Hybrid cars and alternative fuel technologies general information www.hybridcars.com
- Colorado E85 information/availability http://e85vehicles.com/e85-colorado.htm
Taxpayer Services--All tax FYI publications http://www.revenue.state.co.us/TPS_Dir/wrap.asp?incl=fyi_index_rev
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If you have questions on any legal or regulatory topic, please contact:
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