The incentives that the federal government put into place to purchase a hybrid or alternative-fuel vehicle are going to expire at the end of the 2010 year. That doesn’t mean that certain states aren’t going to be offering tax incentives of their own for the purchase of hybrid or electric vehicles, perhaps even a little past that date. Colorado is one of those states. According to the Colorado Department of Revenue, these credits are available for the purchase of an alternative fuel vehicle, for a motor vehicle that is converted to use alternative fuel, or for the replacement of the power source with a source that uses alternative fuel. It also defines alternative fuel as compressed natural gas, propane, ethanol, or any mixture of ethanol containing eighty-five percent or more ethanol by volume. This also includes clean diesel technology. Basically, the spectrum of applicable areas is much broader in state credits than in federal.
Computation of the credit for vehicles purchased after January 1, 2010, is based upon which method of purchase you choose. If you buy a new vehicle, then the difference in price between a hybrid model vehicle and the standard-model of the same vehicle is subtracted from any credits, grants, or rebates, including federal rebates, for which the purchaser is eligible. For example, if you purchase a 2010 Honda Insight and the difference in price of the standard model is $3,800, and you receive a $3,500 federal rebate, you would be able to calculate your state credit based on the $300 difference.
Lease vehicles also qualify for this credit. “The available credit is calculated by subtracting the value of the vehicle when the lease expires from the cost of the vehicle to the lessor at the time of the lease transaction (capitalized cost), and dividing that amount by the cost of the vehicle to the lessor at the time of the lease transaction. This percentage is then multiplied by the qualifying expenses to determine the amount of the expenditure that can be used in computing the amount of the credit. Only the lessor or lessee of the vehicle may claim the credit.
Example: John leases a 2010valued at $23,550. The vehicle will have a value of $16,750 when the lease expires. The credit is computed as follows:
a. Value at time of lease $23,550
b. Value at end of lease $16,750
c. Line a minus Line b $6,800
d. Line c divided by Line a 28.9%
e. Full credit for vehicle $2,448
f. Credit available on lease line d times line e $707.00” (www.colorado.gov)
Unlike the federal credits, the Colorado state credits can also be applied to used vehicles, or vehicles which have been converted to alternative fuel sources as well. Some of the vehicles which qualify for these state tax credits are actually some of the higher ranked vehicles in the alternative fuel class. The 2005-2010Hybrid and 2010 Hybrid are among them, as are the 2003-2010 Hybrid and the 2001-2010 Toyota Prius. For those looking for something on the larger side, the 2008-2009 Hybrid is a qualifier, as is the 2006-2009 Hybrid. All electric models, such as the 2008-2010 are also on the list, which makes this a prime time to test one out if you’ve got the green to do so. Credits for all-electrics like the Tesla can range as high as $6,000.
These credits will not be available in the 2012 year, but should last through 2011. However, there will also be an Innovative Motor Vehicle Credit available from 2012 to 2015 which will provide similar credits. For a full list of vehicles available for these credits, as well as the credit amounts, calculation and claim procedures, you can visit this site: http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251650070498&ssbinary=true
Be sure to also see if the vehicles you’re considering can qualify for a federal tax credit, deduction, or rebate. Here’s more info on new car tax credit, hybrid car tax credit, new diesel car tax credit, and electric car tax credit from the federal government. Also, make sure to check out the list of year-end new car deals, new car lease deals, and certified used car deals being offered by the car makers. Given the year-end and car manufacturers’ desire to sell more cars, there’s great deals to be had if you do your homework and are aware of all the incentives, discounts, rebates you can qualify for. Here’s some tips on year-end car buying strategy.