8.15.3

REDUCED VEHICLE LICENSE TAX RATES

Effective Date: September 12, 2026 Review Due: September 12, 2028

Summary of Changes

Removed from Section C that an alternative fuel special plate or alternative fuel sticker must be issed to maintain a reduced vehicle license tax and restructured the section.

Purpose

To provide guidelines regarding the various types of reduced Vehicle License Tax (VLT) rates.

Authority

Laws 2026, Chapter 232, SB1552, A.R.S. §§28-1177, 28-5801, 28-5804 through 5806; Arizona Constitution, Article IX, Section 2

Policy

  1. Certain vehicles are eligible for a reduced VLT rate. The owner of the vehicle, the type of vehicle or the use of the vehicle determines eligibility for the reduced VLT.
  1. All reduced VLT rates must be applied at the time of initial registration or registration renewal. Refunds will not be given unless it has been determined that the VLT has been overpaid.

The following are examples of the various types of VLT exemption rates:

  1. Alternative Fuel Vehicle - A motor vehicle that is powered by an alternative fuel and meets Arizona's alternative fuel registration requirements. Hybrid vehicles are not eligible for the reduced VLT rate, see Policy 8.10.2 Alternative Fuel Vehicle Registration. A special plate and/or personalized plate may be issued upon request.

  1. For an alternative fuel vehicle that is initially registered in this state prior to January 1, 2022 the VLT exemption rate is as follows:

  1. Pursuant to A.R.S. § 28-5805, the annual VLT is $4 for each $100 in value. 
  2. During the first 12 months of the life of the alternative fuel vehicle (as determined by its initial registration), the value of the vehicle is 1% of the Manufacturer’s Base Retail Price (MBRP) also known as the Factory List Price (FLP), hereinafter referred to as the FLP, of the vehicle.
  3. During each succeeding 12 month period, the value of the vehicle is 15% less than the value for the preceding 12 month period.
  4. The minimum amount of VLT to be assessed is $5 per year for each alternative fuel vehicle that is subject to the tax.

  1. For an alternative fuel vehicle that is initially registered in this state beginning January 1, 2022 and ending December 31, 2022 the VLT exemption rate is as follows:

  1. Pursuant to A.R.S § 28-5805, the annual VLT is $4 for each $100 in value.

  2. During the first 12 months of the life of the alternative fuel vehicle (as determined by its initial registration) the value of the vehicle is 20% of the MBRP also known as the FLP of the vehicle.

  3. During each succeeding 12 month period, the value of the vehicle is 15% less than the value of the preceding 12 month period.

  4. The minimum amount of the VLT to be assessed is $5 per year for each alternative fuel vehicle that is subject to tax.

  1. For an alternative fuel vehicle that is initially registered in this state after December 31, 2022, the VLT shall be collected in accordance with A.R.S. § 28-5801, with the minimum VLT to be assessed of $10.

  1. Contracted School Bus - A privately owned vehicle that is maintained and operated exclusively as a school bus pursuant to a contract with a school district.
  1. Pursuant to A.R.S. § 28-5804, the annual VLT is $4 for each $100 in value.
  2. During the first 12 months of the life of the school bus (as determined by its initial registration), the value of the vehicle is 1% of the FLP of the vehicle.
  3. During each succeeding 12 month period, the value of the vehicle is 15% less than the value for the preceding 12 month period.
  4. The minimum amount of the VLT to be assessed is $5 per year for each school bus that is subject to the tax.
  5. A copy of the lease contract or letter from the school district is required on an annual basis to receive the reduced VLT rate.
  6. The vehicle may be used for business purposes when not under contract with a school district.
  1. Emergency Vehicle - A privately owned motor vehicle that is maintained and operated solely for the purpose of providing ambulance or firefighting services.
  1. Pursuant to A.R.S. § 28-5806, the annual VLT is $4 for each $100 in value.
  2. During the first 12 months of the life of the ambulance or firefighting service vehicle (as determined by its initial registration), the value of the vehicle is 1% of the FLP of the vehicle.
  3. During each succeeding 12 month period, the value of the vehicle is 15% less than the value for the preceding 12 month period.
  4. The minimum amount of the VLT to be assessed is $5 per year for each ambulance or firefighting service vehicle that is subject to the tax
  5. For initial registration, a copy of the Non-Government Emergency Service Vehicle Certification, form # 96-0129, is required.
  6. The vehicle can be used commercially.
  1. Off-Highway Vehicle Decal - A vehicle with a declared usage of “Primarily Off-Highway” and an unladen weight of 2,500 lbs. or less that is designed by the manufacturer primarily for travel over unimproved terrain.
  1. A vehicle that is primarily used off-highway with a declared unladen weight of 1-2,500 lbs. receives a reduced VLT of $3.
  2. The vehicle must have a valid Off-Highway Vehicle decal.
  3. The vehicle owner must sign an Off-Highway Vehicle Decal Application, form #96-0572, stating the vehicle will be used primarily for off-highway use with a declared unladen weight of 1-2,500 lbs.
  4. The decal is valid for one year from the last day of the month of issuance and is renewable no more than six months prior to expiration date.