For Consumers

Alternative Fuel Vehicles (2006-2010) • $2,500-$32,000


PL 109-58 provides for an income tax credit for the purchase of a new, dedicated alternative fuel vehicle of 50% of the incremental cost of the vehicle, plus an additional 30% if the vehicle meets certain tighter emission standards. These credits would range from $2,500 to $32,000 depending on the size of the vehicle. The credit is effective on purchases made after December 31, 2005 and expires on December 31, 2010.

Honda Civic GX • $4,000
A $4,000 tax credit is available for the purchase of the 2007 and 2008 models of the Honda Civic GV natural gas vehicle. According to specifications of the Energy Policy Act of 2005, these tax credits apply to vehicles purchased on or after January 1, 2006. This tax credit replaces the tax deductions that were available prior to January 1, 2006 and does not apply to vehicles purchased before January 1, 2006. The credit applies to new, purchased vehicles only – used vehicles and lease agreements do not qualify.

Home Refueling Appliance • $1,000
PL 109-58 provides for an income tax credit of $1,000 for home refueling appliances. The credit is effective on purchases placed in service after December 31. 2005 and expires December 31, 2009.

For Retailers

Alternative Fuel Infrastructure
PL 109-58 provides for an income tax credit equal to 50% of the cost of natural gas refueling equipment and up to $30,000 in the case of large stations. The credit is effective on purchases placed in service after December 31. 2005 and expires December 31, 2009.

Excise Tax Credit to the Seller of CNG or LNG
PL 109-59 provides for a tax credit of 50¢ per gasoline-gallon-equivalent of CNG or liquid gallon of LNG for the sale of CNG and LNG for use as a motor vehicle fuel. The credit begins on October 1, 2006 and expires on September 30, 2009. Partially offsetting the value of the excise tax credit is an increase in the motor fuels excise tax rate for both CNG and LNG. The CNG rate would increase from 6¢ per gallon equivalent to 18.3¢. The LNG rate would increase from 18.3¢ to 24.3¢ on a liquid gallon basis. Under this approach, CNG and LNG will pay the same rate of tax into the Highway Trust Fund as all other transportation fuels, but then CNG and LNG would receive an excise tax credit paid out of the general fund. The credit will be paid to eligible recipients on a regular basis. The credit is effective on October 1, 2006 and is scheduled to expire on September 30, 2009.