Automotive Fuel Vehicles

INCENTIVES AND LAWS

The main federal incentives for the purchase or conversion of individual alternative fuel vehicles (AFVs) are the federal income tax deductions of $2,000-$50,000 for clean fuel vehicles, and the income tax credit of up to $4,000 for electric vehicles (EVs). An income tax deduction is also available for the installation of refueling or recharging facilities for AFVs. Except for the federal tax credits and deductions, most of the federal incentives are programmatic grants oriented toward large investments such as infrastructure and larger purchases. The lead federal agencies for AFV programs are the U.S. Department of Treasury (i.e., IRS), the U.S. Department of Energy (DOE), the U.S. Department of Transportation (DOT), and the U.S. Environmental Protection Agency (EPA).

Federal Tax Deduction This is a deduction for clean fuel vehicles and certain refueling properties. A tax deduction for the purchase of a new original equipment manufacturer (OEM) qualified clean fuel vehicle, or for the conversion of a vehicle to use a clean-burning fuel, is provided under the Energy Policy Act of 1992 (EPAct), Public Law-102-486, Title XIX-Revenue Provisions, Sec. 179A.

Electric Vehicle Tax Credit.A tax credit for the purchase of qualified EVs and hybrid electric vehicles (HEVs) is provided under EPAct Public Law-102-486, . The size of the credit is 10% of the cost of the vehicle, up to a maximum credit of $4,000. Beginning in 2001, the size of the credit is reduced by 25% per year until the credit is fully phased out. To qualify for the credit, the vehicle must be powered primarily by an electric motor.

Clean Cities Program DOE's Clean Cities Program coordinates voluntary efforts between locally based government and industry to accelerate the use of alternative fuels and expand AFV refueling infrastructure.

Federal Incentives