Alternative Fuel Vehicle

Alternative Fuel Vehicle

An alternative fuel vehicle is one that is powered only by an alternative fuel. Arizona statute defines an alternative fuel as one of the following:

  • Electric
  • Natural gas / CNG or LPG
  • Hydrogen
  • Blend of 70 percent alternative fuel, 30 percent gasoline (unavailable in Arizona)
  • Solar

If a vehicle is converted to operate solely on alternative fuel, the Arizona Department of Environmental Quality must inspect the vehicle and issue an Alternative Fuel Certificate.

HOV Lane Privileges

If you have a current AFV special plate, you can use the HOV freeway lanes at any time, regardless of the number of passengers. 

Emissions

Hydrogen, solar and electric powered vehicles are exempt from all emissions testing requirements.

For more information contact the Arizona Department of Environmental Quality at 877.692.9227 or visit myazcar.com.

Reduced Vehicle License Tax

In accordance with Arizona Revised Statute 28-5805, the vehicle license tax (VLT) for alternative fuel vehicles is determined by when the vehicle is initially registered by its owner. Per ARS 28-5805, beginning in 2023, alternative fuel vehicles will be assessed VLT using the same formula used for traditional vehicles. This phased-in approach will make the VLT formula used for alternative fuel vehicles the same as the formula used for traditional cars and trucks, bringing fairness to VLT assessments for all vehicles.

Per state law, there are three formulas used for determining the VLT of an alternative fuel vehicle and the one attached to a vehicle is determined by the date it was registered by its owner.

Show me the formulas

For AFVs registered prior to Jan. 1, 2022:

The vehicle license tax (VLT) for an AFV has a rate of $4 per $100 of assessed valuation, which is determined by the following: For the first year, the assessed value is 1% of the factory list price (MSRP) of the AFV. For subsequent years, the assessed value depreciates 15% each year. The minimum VLT for an AFV registration is $5.

For AFVs registered between Jan. 1 and Dec. 31, 2022:

The vehicle license tax (VLT) for an AFV has a rate of $4 per $100 of assessed valuation, which is determined by the following: For the first year, the assessed value is 20% of the factory list price (MSRP) of the AFV. For subsequent years, the assessed value depreciates 15% each year. The minimum VLT for an AFV registration is $5.

For AFVs registered after Dec. 31, 2022:

The vehicle license tax (VLT) for an AFV will be calculated using the same formula used for traditional cars and trucks. The VLT has a rate of $2.80 per $100 of assessed valuation, which is determined by the following:

  • For the first year, the assessed value is 60% of the factory list price (MSRP) of the AFV.Calculating Vehicle License Tax for Alternative Fuel Vehicles
  • For subsequent years, the assessed value depreciates 16.25% each year and the VLT has a rate of $2.89 per $100.
  • The minimum VLT for registration is $10.

It’s important to note that the VLT formula used is determined by a vehicle’s registration date, which is different from the purchase date. A temporary registration permit issued by a vehicle dealer qualifies as the registration date, but must be issued before Jan. 1, 2022, for a vehicle to have its VLT calculated using the 1% formula. For private party sales, new title documentation must be processed by an MVD or an Authorized Third Party office before Jan. 1, 2022, for the vehicle to have its VLT calculated using the 1% formula. Note: MVD offices will be closed Friday Dec. 31, 2021, in observance of the New Year’s Day holiday.

FAQ

Why are the VLT rates for alternative fuel vehicles changing?

In 2019, the Legislature amended Arizona Revised Statute 28-5805, which implements a phased-in approach for making the VLT formula used for alternative fuel vehicles the same one used currently for traditional cars and trucks, bringing parity to VLT assessments. The changes in the formula took effect January 2022 and will be completely phased-in by 2023. The change means that drivers of alternative fuel vehicles will contribute to the preservation and maintenance of the state’s 7,000-mile highway system at the same rate as drivers of traditional vehicles. Bringing parity to VLT assessments is especially important for the continued maintenance and expansion of Arizona’s infrastructure as alternative fuel vehicles continue to increase in popularity in Arizona.

When do I need to purchase an AFV to qualify for the VLT to be calculated using the currently effective 1% formula?

An AFV registered prior to Jan. 1, 2022, will have its VLT calculated using the 1% formula.

I own an alternative fuel vehicle and it was registered prior to Jan. 1, 2022. Will my VLT rate change?

No. The VLT formula used at the time of initial registration stays with the vehicle as long as the registration cycle remains the same. A change in ownership, including the addition or removal of a joint owner, or cancelled registration would create a new registration cycle and trigger a change to the VLT formula that is currently effective.

If I transfer the title or sell my alternative fuel vehicle after Jan. 1, 2022, will the new owner receive the VLT rate from when the car was registered?

No. The VLT formula only stays with the vehicle as long as the registration cycle remains the same. A change in ownership or a canceled registration would create a new registration cycle and will trigger a change to the VLT formula that is currently effective.

Establishing a new registration cycle will trigger the currently effective VLT formula. What does this mean?

A new registration cycle can be triggered in a variety of ways. Here are examples:

  • The removal or addition of a joint owner creates a new registration cycle which would trigger the currently effective VLT formula. For instance, if two people are listed as owners of a vehicle and the title is changed to remove one person, this will result in a new registration cycle and the currently effective VLT formula will be used.
  • A lease buy-out would establish a new registration cycle and trigger the use of the VLT formula that is currently effective.
  • If you purchase a used AFV, the date you register the vehicle begins a new registration cycle and will trigger the currently effective VLT formula.
  • If someone moves to Arizona from out-of-state and registers their vehicle in Arizona, a new registration cycle would trigger the currently effective VLT formula, no matter when it was initially registered in the other state.
  • A salvage, flood or nonrepairable brand on a title will cancel the registration.