Recently enacted Colorado legislation makes a number of changes to the innovative motor vehicle credit and the innovative truck credit, both of which are available against corporate and personal income taxes. Significantly, the legislation establishes fixed credit amounts for each category of vehicle and truck weight class, reduces the available credit amounts beginning in tax year 2020, and sunsets the credits after tax year 2021. Additionally, beginning in tax year 2017, a credit is no longer available for the purchase, lease, or conversion of Category 2 and Category 3 vehicles, which are diesel-electric hybrid vehicles with a fuel economy of at least 70 miles per gallon.
The bill also allows a taxpayer to elect to transfer the entire tax credit allowed for the purchase or lease of a vehicle to a financing entity when a purchase or lease is finalized. The financing entity must compensate the taxpayer for the full nominal value of the credit, except that the financing entity may collect an administrative fee not to exceed $150. Additional changes include restricting the credit to the purchase or lease of new vehicles beginning in tax year 2017; establishing two years as the minimum duration for a qualifying lease; and requiring the Department of Revenue to record and track the Vehicle Identification Numbers (VIN) of qualifying vehicles for which credit is awarded, beginning in tax year 2017.
H.B. 1332, Laws 2016, effective June 6, 2016, and applicable as noted above