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Green Driver State Incentives in Colorado

Numerous state incentives give Colorado drivers the opportunity to save some green by going green. Driver incentives range from those offered by government agencies such as the CO Division of Motor Vehicles to others granted by private entities. To learn more on how you can save money as an eco-friendly driver, read on.

Colorado's incentives and green laws might evolve as the state focuses more and more on the environment. Two additional resources worth consulting are your local Division of Motor Vehicles branch and the Alternative Fuels Data Center.

CO Registration Emissions Testing Exemptions for Fuel Efficient Vehicles

The Colorado Division of Motor Vehicles exempts the following vehicles from emissions testing when it comes time for first-time vehicle registration or car registration renewal. For full details on all CO vehicle emissions exemptions, consult our section on smog and emissions checks.

  • Electric-powered vehicles (EVs).
  • Hybrid electric vehicles (HEVs such as the Toyota Prius and Honda Insite).
  • New vehicles*.

*For the 7 model years, newly manufactured vehicles can skip emission testing and smog checks, unless vehicle ownership changes hands.

If you have questions regarding Colorado emissions exemptions and requirements, call your county motor vehicle office, the Emissions Program office at the Colorado DMV at (303) 205-5603, or visit Air Care Colorado. If you don't qualify for the emissions exemption, locate a nearby gas vehicle emission station through the State or by entering your ZIP code into the Emission Station Locator widget at the bottom of this page.

High Occupancy Vehicle (HOV) Lane Exemption for Hybrid Electric Vehicles (HEVs)

Those who drive hybrid electric vehicles have the green light to use high occupancy vehicle (HOV) and high occupancy toll (HOT) lanes with a single occupant, as permitted by the Colorado Department of Transportation (CDOT). If you have a qualifying and approved vehicle, you must:

  1. Obtain a permit*.
  2. Display an HOV exemption decal.
  3. Display a toll transponder.

To gain eligibility for the HOV/HOT Lane Exemption, you can apply online or download a printable application to fax it in.

NOTE: CDOT created a waiting list for new applicants as it has already reached its permit quota of 2,000. For more on this and the hybrid vehicle program, check out CDOT's hybrid FAQs page and the Colorado Revised Statutes 42-4-1012.

Colorado State Tax Incentives and Federal Tax Credits

Colorado offers its green drivers the following state tax and sales tax incentives.

  • Alternative Fuel, Advanced Vehicle, and Idle Reduction Technology Tax Credit.
  • Low Emission Vehicle (LEV) Sales Tax Exemption.

For more on federal tax incentives, see the bottom of this section.

Use the following as a starting place as you dig deeper into Colorado tax incentives. You might also want to consult a tax professional, the CO Department of Revenue or your local IRS Taxpayer Assistance Center for even more details.

Alternative Fuel, Advanced Vehicle, and Idle Reduction Technology Tax Credit

Also known as the Innovative Motor Vehicle Credit, this CO incentive benefits owners of the following:

  • Vehicles that use (or are converted to use) an alternative fuel.
  • Hybrid electric vehicles (HEVs)*.
  • Plug-in hybrid electric vehicles (PHEVs)*.
  • Vehicles with a replaced power source that use an alternative fuel.

*To qualify, electric vehicles and plug-in hybrid electric vehicles must have a maximum speed of at least 55 MPH.

Additionally, the Colorado Colorado Department of Revenue only offers this incentive to qualified individuals who have:

  • Titled and registered their vehicle in Colorado.
  • Purchased or converted their vehicle between January 1, 2014 and December 31, 2016.

CO tax credits vary depending on the category in which your vehicle falls under and the tax year. For specifics, refer to the category chart listed through the Alternative Fuels Data Center. This chart also lists tax credit info for idle reduction technologies.

Please also note that the Department of Revenue determines the tax credits in one of two ways if you purchased, leased, or converted any of the following during the tax year:

  • Compressed natural gas (CNG) vehicles.
  • Electric vehicles.
  • Plug-in hybrids.

The Colorado Department of Revenue offers a number of Income Tax FYI Publications to help CO residents through the filing process. Specifically, check out Income 67: Innovative Motor Vehicle and Alternative Fuel Vehicle Credits for more information. Two other great resources include House Bill 13-1247, 2013 and Colorado Revised Statutes 39-22-516.5 and 39-22-516.7.

Low Emission Vehicle (LEV) Sales Tax Exemption

Colorado exempts vehicles, vehicle power sources, and parts from state tax when used for converting a vehicle power source to reduce emissions. Additionally, these vehicles must be certified to federal LEV standards and possess a gross vehicle weight rating of more than 10,000 pounds. Such a power source includes engine or motor and associated:

  • Wiring.
  • Fueling lines.
  • Engine coolant system.
  • Fuel storage containers.
  • Other components.

For more information, check out Colorado Revised Statutes 39-26-719.

Federal Tax Credits for Fuel-Efficient Vehicle Owners

In addition to the Colorado-specific incentives offered by the State, there are a number of federal tax credits for fuel-efficient vehicle owners. You might qualify for tax credits offered by the IRS if you purchase:

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

To find out if you're eligible to save even more money, check out fueleconomy.gov.

Auto Insurance Discounts for Eco-Friendly Driving and Green Vehicles

Some Colorado 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.

If your current Colorado 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.

CO Clean Transportation Incentives

The state incentives don't stop at tax breaks and HOV access. Clean transportation perks such as grants, exemptions, and private-company incentives might save you even more money.

Grants

Colorado offers three state incentives in the form of grants for those working within the realm of alternative fuels. These include:

  • Plug-in Electric Vehicle (PEV) and Electric Vehicle Supply Equipment (EVSE) Grants.
  • Biofuels Research Grants.
  • Ethanol Infrastructure Grants.

For more info, check out the U.S. Department of Energy's page on Colorado grants.

Alternative Fuel Vehicle (AFV) Weight Limit Exemption

Alternative fuel vehicles get a gross vehicle weight rating limit that is 1,000 lbs more than those that apply to comparable conventional vehicles. In order to qualify for this greater limit on a highway that is not part of the interstate system, your AFV must run on alternative fuel or both alternative and conventional fuel. For more on this, refer to Colorado Revised Statutes 25-7-106.8 and 42-4-508.

Natural Gas Fueling Station Air Quality Permit Exemption

Natural gas fueling stations do not have to file Air Pollutant Emission Notices thanks to this exemption granted by the Colorado Department of Public Health & Environment's Air Quality Control Commission. Find the full details under Colorado Air Quality Control Commission Regulations Number 3, Part A, Section ii.D.1.hhh.

Find a Nearby Colorado Emissions Testing Station

Locate the closest CO smog and emissions testing station with the widget below:

Please enter your ZIP code OR city and state abbreviation

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