Go to the Colorado Department of Revenue website, www.taxcolorado.com
and get form 104 for filing taxes and form 104CR for claiming credits. Credits are listed in the "Income TAX FYIs", FYI #9, here,
http://www.revenue.state.co.us/fyi/html/income09.html

You can only claim enough to offset your total tax. If the credit is bigger than your tax, carry the remainder forward.

Here's an imaginary example: Let's say your HiHy gets a $3500 credit, your W-2 shows you paid $2500 in CO state tax in 2007, and your tax form 104 shows your total CO tax due is $3000. Normally you would have to pay $500. With the hybrid credit, you claim the first $3000 of your $3500 entitlement on line 42 of 104CR, offsetting all your tax and bringing it to zero. Instead of writing that $500 check on April 15, you get a $2500 refund.

In this example, you've only used the first $3000 of your $3500 entitlement. At the bottom of form 104CR in the area marked "Credits to be carried forward" you just write "$500 of Alternative fuel vehicle credit carried forward to 2008" and you're done.

Tax software will do most of this for you. If you don't pay Colorado income tax, you won't see any benefit.