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On Wednesday, Colorado’s Senate passed HB 1326, setting the stage for what is expected to be eventual enactment of a new pro-NGV incentive bill. The measure, previously passed by the House, now is being sent to Governor Hinckenlooper, who is expected to sign the measure. The bill fills an important void by expanding incentives already in place to cover heavy duty vehicles above 26,000 pounds and also by now including LNG. Under the bill, both new acquired as well as converted vehicles qualify for the tax incentive as well as a separate sales and use tax exemption. Dedicated, bi-fuel and dual- fuel heavy-duty vehicles qualify, and the incentives will be in place for vehicles purchased from July 1, 2014 to December 31, 2021. The tax credits are tied to a percentage of a vehicle’s incremental cost, and over time the percentages allowed (but not the total value of the credits) decline. The incentives are also refundable so that, if their value exceeds a business’ annual tax obligation, they can still benefit.

The tax credits for vehicles in the first three years are worth 18 percent of the cost of a new NGV or 55 percent of the cost to convert a vehicle to operate on natural gas. For all years, the values of the tax credits are capped as follows: light duty passenger vehicles, $6,000; light duty trucks $7,500; medium duty truck; $15,000; and heavy duty truck $20,000. Starting in the fourth year, the percentage used to compute the value of the tax credits starts to decline, and does so progressively — in the case of new vehicles (i.e., 15%, 11.25%, 7.5% and 3.75%), and also for converted vehicles (45%, 33.75%, 22.5% and 11.25%). The bill also includes a requirement that Colorado authorities make a determination before tax year 2019 regarding the life-cycle emissions of different motor vehicle technologies and only those with greater emission benefits will continue to qualify for credits after 2019.

The sale tax exemption provided in the bill excludes from tax 25 percent of the value of the new or converted vehicle, so that only 75 percent of the cost is subject to sales tax. This rule is intended to address the higher incremental cost of alternative fuel vehicles. The sales and use tax provision beginning July 1, 2014 is only available, in the case of NGVs, to vehicles that have a gross vehicle weight rating of greater than 10,000 pounds. The incentives included in the bill also extend to other alternative fuels and technologies such as hybrid electric vehicles but those provisions are not addressed here.

Numerous NGVAmerica members were involved in supporting passage of this bill and we congratulate them all for their successful effort. For more information, contact Jeff Clarke 202.824.7364 or