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Green Driver State Incentives in Arizona

Arizona works hard to preserve its natural beauty, and therefore encourages drivers to go green with numerous money- and time-saving incentives. Whether you drive an electric car (EV), hybrid, alternative fuel vehicle (AFV), or some other fuel-efficient vehicle, keep reading for more on how you and the environment can benefit.

As the state becomes more focused on the environment, its vehicle-related laws might also change. Stay up to date by consulting your local Motor Vehicle Division (MVD) branch and the Alternative Fuels Data Center.

Arizona Vehicle Registration and Emissions Testing

Arizona does not require all vehicles to undergo an emissions test as part of first-time vehicle registration and registration renewal. In fact, only residents whose vehicles are registered* in the emissions test areas located in metro Phoenix (Area A) and metro Tucson (Area B) are subject to the emissions requirement.

*If you drive an alternative fuel vehicle that's either registered in or used to commute to the areas mentioned above, also check out our page on green vehicle laws for AFV registration and license plate details.

Emissions Test Exemptions

Keep in mind, the MVD exempts the most of the following fuel-efficient and green vehicles from emissions testing:

  • Electric vehicles.
  • Solar-powered vehicles.
  • Hydrogen-powered vehicles.
  • Gas and alternative fuel vehicles with current model year and previous 4 model years (excluding reconstructed vehicles)

If you own an OEM alternative fuel vehicle, your registration renewal should indicate your exemption (look for a message regarding an in-lieu fee). Otherwise, you'll need to prove to the Arizona Department of Environmental Quality (ADEQ) that your vehicle is an OEM AFV by either:

  • Submitting original documentation.
  • Having your vehicle inspected by the ADEQ.

For full details on Arizona emissions test exemptions and requirements, consult the ADEQ’s myAZcar.com site, call (800) 234-5677, or refer to our page on AZ emissions and smog testing.

If your vehicle requires an emissions test, scroll down to our locator widget at the bottom of the page to find the nearest inspection station.

Auto Insurance Discounts for Eco-Friendly Driving and Green Vehicles

Some Arizona auto insurance providers offer insurance discounts for having green driving habits and/or driving a fuel-efficient vehicle. Consult your car insurance company about potential green vehicle discounts such as:

  • Hybrid auto discounts.
  • Alternative fuel vehicle (AFV) discounts.
  • Economy car discounts.
  • Low-mileage discounts.
  • Pay as you drive discounts.

Auto insurance discounts vary by provider and circumstances. For example, you might receive a 10% discount on car insurance for owning or leasing a hybrid car, while maintaining low mileage can earn an even higher auto insurance discount.

If your current AZ auto insurance carrier doesn't reward eco-friendly driving, find one that does. Compare auto insurance rates online and save some green for going green.

Full-Time AZ HOV Lane Access for Alternative Fuel Vehicles

Drivers of alternative fuel vehicles (AFV) can use Arizona high occupancy vehicle (HOV) lanes regardless of the time of day and their number of passengers. To do so, your vehicle must display a current AFV special plate or sticker.

By definition, an alternative fuel vehicle is powered by any of the following alternative fuels:

  • Electricity.
  • Solar.
  • Alcohol.
  • Compressed natural gas.
  • Liquefied natural gas.
  • Hydrogen.
  • 70% alternative fuel/30% gasoline blend.

ADOT offers details on AFV registration, including an infographic on alternative fuel and energy efficient license plates. Arizona Statues 28-2416 also covers AFV specifics. Or for general info on Arizona vehicle registration and license plates, check out our online guides.

Arizona AFV and Electric Car Parking Incentives

If you drive an alternative fuel vehicle, you can park in designated carpool operator parking spaces without penalty. Arizona Statutes 28-877 covers the specifics. See the list of alternative fuels in the section above to determine if your vehicle qualifies as an AFV. And if so, learn more on how to register your AFV in Arizona.

If you drive an electric vehicle, you can park in spaces specially designated for electricity-powered vehicles, unless your EV bears an alternative fuel vehicle special plate or sticker pursuant to Arizona Revised Statutes 28-2416.

Electric Vehicle Charging Time-of-Use Plan

Arizona Public Service Company (APS) offers its residential customers a money-saving EV Time-of-Use Plan to encourage the purchase of electric vehicles. By charging your qualified PEV at off-peak hours (nighttime and other low-demand periods), you can generate sizable savings.

To qualify, you must have an Advanced Metering Infrastructure set up. Check out the rate impact chart online to see how at-home EV charging can affect your service plan. Keep in mind, this reduced rate only lasts through December 31, 2015.

Tax Incentives

Arizona and the federal government reward eco-friendly driving with generous tax incentives. Keep reading for more on state and federal tax breaks.

If you need help navigating tax incentives when it comes time to file, consult a tax professional, the Arizona Department of Revenue, or your local IRS Taxpayer Assistance Center.

Federal Tax Credits for Owners of Fuel-Efficient Cars

Owners of fuel-efficient vehicles might also qualify for federal tax credits offered by the IRS. Eligible alternative energy vehicles include:

  • Electric cars (EV.)
  • Hybrids.
  • Plug-in hybrids (PEV).
  • Diesels.
  • Alternative fuel vehicles (AFV).

For additional information on federal tax credits, jump over to fueleconomy.gov.

Reduced Tax Rate for Converted Alternative Fuel Vehicles

The State encourages Arizona residents to purchase or modify vehicles to run on alternative fuels by offering a reduced tax rate. To qualify, your vehicle must have undergone a conversion that renders it:

  • Capable of running on a dedicated alternative fuel.
  • Incapable of operating on any other fuel type.

To take advantage of the lower tax rate, you must obtain an alternative fuel certificate from the ADEQ or the MVD. For more info, refer to Arizona Revised Statutes 28-5805, or call (602) 771-3981 (Phoenix Metro Area) or (520) 628-5651 (Tucson Metro Area).

Tax Exemption for Alternative Fuel and Alternative Fuel Vehicles

The following are exempt from Arizona use tax:

  • Natural gas or liquefied petroleum (for operating a motor vehicle).
  • Alternative fuel vehicles (originally manufactured as a diesel-powered vehicle, then converted to run on alternative fuel).
  • Equipment installed in a conventional diesel fuel motor vehicle to convert it to run on alternative fuel.

Check out Arizona Statutes 42-5159 for full details.

Reduced Vehicle License Tax (VLT) for Alternative Fuel Vehicles

When registering a qualified alternative fuel vehicle in Arizona, residents get a discount on their vehicle license tax. The VLT rate is $4 per $100 of the AFV's assessed value. The State determines what you'll pay by the following values:

  • First year—1% of your AFV's factory list price (FLP).
  • Subsequent years—15% depreciation each year.
  • A minimum AFV registration fee of $5.

To figure out what you would have otherwise paid, multiply the VLT for gasoline- or diesel-powered vehicles by .02381. That's the amount Arizona would have charged you (or $5, whichever is higher). For more on the vehicle license tax and additional fees, refer to the Arizona AFV registration guide.

Tax Credit for At-Home Electric Vehicle Charging Outlets

Arizona taxpayers can take advantage of a tax credit (up to $75) for costs they incur when installing or including an electric vehicle recharge outlet in their homes.

To qualify, you must connect your EV recharge outlet to your utility system with a dedicated line that:

  • Can run at normal secondary voltages.
  • Follows local building safety codes (if applicable).
  • Runs in line with typical needs and methods of electric vehicle recharging.

To learn more about this credit for in-house EV recharge outlets, refer to Arizona Statutes 43-1090 and 43-1176.

Arizona Weight Exemption for Idle Reduction Technology

The State grants heavy-duty vehicles equipped with idle reduction technology a weight exemption to account for the additional weight. In fact, a qualified vehicle can exceed the state weight limits by up to 400 lbs. For full details, consult Arizona Statutes 28-1100.

Find a Nearby Arizona Emissions Testing Station

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