Search Federal and State Laws and Incentives
Search incentives and laws related to alternative fuels and advanced vehicles. You can search by keyword, category, or both.
Search Results | 12 laws and incentives
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Federal | Alternative Fuel Excise Tax Credit | Incentives |
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Alternative Fuel Excise Tax Credit
Type: Incentives |
Jurisdiction: Federal
NOTE: This incentive was originally set to expire on December 31, 2021, but has been extended through December 31, 2024, by Public Law 117-169. A tax incentive is available for alternative fuel that is sold for use or used as a fuel to operate a motor vehicle. A tax credit in the amount of $0.50 per gallon is available for the following alternative fuels: natural gas, liquefied hydrogen, propane, P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and compressed or liquefied gas derived from biomass. For propane and natural gas sold after December 31, 2015, the tax credit is based on the gasoline gallon equivalent (GGE) or diesel gallon equivalent (DGE). For taxation purposes, one GGE is equal to 5.75 pounds (lbs.) of propane and 5.66 lbs. of compressed natural gas. One DGE is equal to 6.06 lbs. of liquefied natural gas.For an entity to be eligible to claim the credit they must be liable for reporting and paying the federal excise tax on the sale or use of the fuel in a motor vehicle. Tax exempt entities such as state and local governments that dispense qualified fuel from an on-site fueling station for use in vehicles qualify for the incentive. Eligible entities must be registered with the Internal Revenue Service (IRS). The incentive must first be taken as a credit against the entity’s alternative fuel tax liability; any excess over this fuel tax liability may be claimed as a direct payment from the IRS. The tax credit is not allowed if an incentive for the same alternative fuel is also determined under the rules for the ethanol or biodiesel tax credits.
For more information about claiming the credit, see IRS Form 4136, which is available on the IRS Forms and Publications website. (Reference 26 U.S. Code 6426 and Public Law 117-169)
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Federal | Biodiesel Mixture Excise Tax Credit | Incentives |
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Biodiesel Mixture Excise Tax Credit
Type: Incentives |
Jurisdiction: Federal
NOTE: This incentive was originally set to expire on December 31, 2022, but has been extended through December 31, 2024, by Public Law 117-169. A biodiesel blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive in the amount of $1.00 per gallon of pure biodiesel, agri-biodiesel, or renewable diesel blended with petroleum diesel to produce a mixture containing at least 0.1% diesel fuel. Only blenders that have produced and sold or used the qualified biodiesel mixture as a fuel in their trade or business are eligible for the tax credit. The incentive must first be taken as a credit against the blender’s fuel tax liability; any excess over this tax liability may be claimed as a direct payment from the IRS. Claims must include a copy of the certificate from the registered biodiesel producer or importer that: identifies the product; specifies the product’s biodiesel, agri-biodiesel, and/or renewable diesel content; confirms that the product is properly registered as a fuel with the U.S. Environmental Protection Agency; and confirms that the product meets the requirements of ASTM Standard D6751. Renewable diesel is defined as liquid fuel derived from biomass that meets EPA’s fuel registration requirements and ASTM Standards D975 or D396; the definition of renewable diesel does not include any fuel derived from co-processing biomass with a feedstock that is not biomass.
For more information about claiming the credit, see IRS Form 4136, which is available on the IRS Forms and Publications website. (Reference 26 U.S. Code 6426 and Public Law 117-169)
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Federal | Biodiesel Income Tax Credit | Incentives |
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Biodiesel Income Tax Credit
Type: Incentives |
Jurisdiction: Federal
NOTE: This incentive was originally set to expire on December 31, 2022, but has been extended through December 31, 2024, by Public Law 117-169. A taxpayer that delivers pure, unblended biodiesel (B100) into the tank of a vehicle or uses B100 as an on-road fuel in their trade or business may be eligible for an incentive in the amount of $1.00 per gallon of biodiesel, agri-biodiesel, or renewable diesel. If the biodiesel was sold at retail, only the person that sold the fuel and placed it into the tank of the vehicle is eligible for the tax credit. The incentive is allowed as a credit against the taxpayer’s income tax liability. Claims must include a copy of the certificate from the registered biodiesel producer or importer that: identifies the product; specifies the product’s biodiesel, agri-biodiesel, and/or renewable diesel content; confirms that the product is properly registered as a fuel with the U.S. Environmental Protection Agency (EPA); and confirms that the product meets the requirements of ASTM Standard D6751. Renewable diesel is defined as liquid fuel derived from biomass that meets EPA’s fuel registration requirements and ASTM Standards D975 or D396; the definition of renewable diesel does not include any fuel derived from co-processing biomass with a feedstock that is not biomass.
For more information about claiming the credit, see Internal Revenue Service (IRS) Forms 637 and 8864, which are available on the IRS Forms and Publications website. For information about registering with the EPA, see the EPA Fuels Registration, Reporting, and Compliance Help website. (Reference 26 U.S. Code 40A and Public Law 117-169)
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Federal | Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit | Incentives |
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Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit
Type: Incentives |
Jurisdiction: Federal
The Inflation Reduction Act of 2022 (Public Law 117-169) amended the Qualified Plug-in Electric Drive Motor Vehicle Credit (IRC 30D), now known as the Clean Vehicle Credit, and added a new requirement for final assembly in North America that took effect on August 17, 2022, with additional requirements taking place beginning January 1, 2023. For vehicles placed in service on or after January 1, 2023, the Clean Vehicle Credit provisions will be subject to updated guidance from the IRS and the U.S. Department of the Treasury. See the IRS Plug-In Electric Drive Vehicle Credit for further details. More details are provided below by date of purchase and on the list of EVs with Final Assembly in North America.
For up-to-date information on eligibility requirements for the Clean Vehicle Credit for vehicles acquired beginning January 1, 2023, see the information from the IRS.
Vehicles Placed in Service After December 31, 2022Beginning January 1, 2023, the Clean Vehicle Credit (CVC) provisions remove manufacturer sales caps, expand the scope of eligible vehicles to include both EVs and FCEVs, and require a traction battery that has at least seven kilowatt-hours (kWh). An available tax credit under the CVC may be limited by the vehicle’s MSRP and the buyer’s modified adjusted gross income (see below). The CVC provisions also establish criteria for a vehicle to be considered eligible that involve sourcing requirements for critical mineral extraction, processing, and recycling and battery component manufacturing and assembly; these critical material and battery component provisions begin to apply only after the U.S. Department of the Treasury issues guidance on these particular provisions. Until the Treasury Department issues this critical mineral and battery component guidance, the available CVC tax credit amounts to a base amount of $2500 plus, for a vehicle that draws propulsion energy from a battery with at least 7 kWh of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kWh. The total tax credit available for a vehicle may not exceed $7,500. Once the Treasury Department issues the critical mineral and battery component guidance, vehicles that meet the critical mineral requirements are eligible for $3,750 tax credit, and vehicles that meet the battery component requirements are eligible for a $3,750 tax credit. Vehicles meeting both the critical mineral and the battery component requirements are eligible for a total tax credit of $7,500. Critical Minerals: To be eligible for the $3,750 critical minerals portion of the tax credit, the percentage of the value of the battery’s critical minerals that are extracted or processed in the United States or a U.S. free-trade agreement partner or recycled in North America, must increase according to the following schedule:
Battery Components: To be eligible for the $3,750 battery components portion of the tax credit, the percentage of the value of the battery’s components that are manufactured or assembled in North America must increase according to the following schedule:
To be eligible for the CVC tax credit, vans, sport utility vehicles, and pickup trucks must meet the additional requirements of not having a final manufacturer suggested retail price (MSRP) above $80,000, and all other vehicles may not have a final MSRP above $55,000. The final MSRP can be found on the vehicle’s window sticker, which is also known as the “Monroney label”; the final MSRP includes any trim, options, or accessories for the particular vehicle and excludes the destination fee. Additionally, a taxpayer’s eligibility for the tax credit may be limited by thresholds for modified adjusted gross income (MAGI); only individuals having a MAGI below the following thresholds are eligible for the tax credit:
Further guidance on these provisions is forthcoming. For more information, including additional eligibility requirements, see the IRS Plug-In Electric Drive Vehicle Credit website. Vehicles Purchased Between August 17 and December 31, 2022Qualifying EVs purchased and delivered between August 17, 2022, and December 31, 2022, are eligible for the tax incentive as described below for vehicles purchased before August 17, 2022, but are limited to vehicles with final assembly in North America. Manufacturer sales caps on vehicles apply. Note that for some manufacturers, the build location may vary based on the specific vehicle, trim, or the date in the Model Year when it was produced because some models are produced in multiple locations. The build location of a particular vehicle should be confirmed by referring to its Vehicle Identification Number (VIN) using the U.S. Department of Transportation’s VIN decoder or an information label affixed to the vehicle. For more information, see EVs with Final Assembly in North America. Vehicles Purchased Before August 17, 2022Qualifying EVs purchased before August 17, 2022, are eligible for a tax credit that is available for the purchase of a new qualified EV that draws propulsion using a traction battery that has at least five kilowatt-hours (kWh) of capacity, uses an external source of energy to recharge the battery, has a gross vehicle weight rating of up to 14,000 pounds, and meets specified emission standards. The minimum credit amount is $2,500, and the credit may be up to $7,500 based on each vehicle’s traction battery capacity and the gross vehicle weight rating. The credit will begin to be phased out for each manufacturer in the second quarter following the calendar quarter in which a minimum of 200,000 qualified PEVs have been sold by that manufacturer for use in the United States. This tax credit is also available for future EV owners with a written binding contract to purchase a new qualifying electric vehicle before August 16, 2022, but do not take possession of the vehicle until on or after August 16, 2022. For more information, including qualifying vehicles and sales by manufacturer, see the Internal Revenue Service (IRS) Qualified Plug-in Electric Drive Motor Vehicle Credit website. (Reference U.S. Code 30D and Public Law 117-169)
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Federal | Advanced Technology Vehicle (ATV) and Alternative Fuel Infrastructure Manufacturing Incentives | Incentives |
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Advanced Technology Vehicle (ATV) and Alternative Fuel Infrastructure Manufacturing Incentives
Type: Incentives |
Jurisdiction: Federal
The U.S. Department of Energy’s (DOE) Advanced Technology Vehicles Manufacturing Loan Program may offer direct loans to eligible manufacturers for up to 30% of the cost of re-equipping, expanding, or establishing manufacturing facilities in the United States used to produce qualified ATVs, ATV components, or alternative fuel infrastructure, including associated hardware and software. Qualified ATVs are light-, medium-, and heavy-duty ultra-efficient vehicles that meet specified federal emission standards and fuel economy requirements, and emit low or zero exhaust. Ultra-efficient vehicles are fully closed compartment vehicles, designed to carry at least two adult passengers, which achieve at least 75 miles per gallon while operating on gasoline or diesel fuel, as hybrid electric vehicles operating on gasoline or diesel fuel, or as fully electric vehicles. Qualified components must be designed for ATVs and installed for the purpose of meeting ATV performance requirements, as determined by DOE. For more information, see the DOE’s ATVs Manufacturing Loan Program website and ATVs Manufacturing Loan Program fact sheet. (Reference 42 U.S. Code 17013 and Public Law 117-169)
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Federal | Alternative Fuel Mixture Excise Tax Credit | Incentives |
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Alternative Fuel Mixture Excise Tax Credit
Type: Incentives |
Jurisdiction: Federal
NOTE: This incentive was originally set to expire on December 31, 2021, but has been extended through December 31, 2024, by Public Law 117-169. An alternative fuel blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive on the sale or use of the alternative fuel blend (mixture) for use as a fuel in the blender’s trade or business. The credit is in the amount of $0.50 per gallon of alternative fuel used to produce a mixture containing at least 0.1% gasoline, diesel, or kerosene. Qualified alternative fuels are liquefied hydrogen, P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and liquid fuel derived from biomass. The incentive must be taken as a credit against the blender’s alternative fuel tax liability. The tax credit is not allowed if an incentive for the same alternative fuel is also determined under the rules for the ethanol or biodiesel tax credits.
For more information about claiming the credit, see IRS Form 720, which is available on the IRS Forms and Publications website. (Reference 26 U.S. Code 6426 and Public Law 117-169)
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Federal | Alternative Fuel Infrastructure Tax Credit | Incentives |
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Alternative Fuel Infrastructure Tax Credit
Type: Incentives |
Jurisdiction: Federal
Fueling equipment for natural gas, propane, liquefied hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel installed through December 31, 2022, is eligible for a tax credit of 30% of the cost, not to exceed $30,000. Permitting and inspection fees are not included in covered expenses. Fueling station owners who install qualified equipment at multiple sites are allowed to use the credit towards each location. Unused credits that qualify as general business tax credits, as defined by the Internal Revenue Service (IRS), may be carried backward one year and carried forward 20 years. For more information about claiming the credit, see IRS Form 8911, which is available on the IRS Forms and Publications website. Beginning January 1, 2023, fueling equipment for natural gas, propane, hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel, is eligible for a tax credit of 30% of the cost or 6% in the case of property subject to depreciation, not to exceed $100,000. Permitting and inspection fees are not included in covered expenses. Qualified fueling equipment must be installed in locations that meet the following census tract requirements:
Eligible projects must also meet apprenticeships and prevailing wage requirements. Consumers who purchase qualified residential fueling equipment between January 1, 2023, and December 31, 2032, may receive a tax credit of up to $1,000. (Reference 26 U.S. Code 30C, 30D, and 38 and Public Law 117-169)
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Federal | Pre-Owned Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit | Incentives |
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Pre-Owned Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit
Type: Incentives |
Jurisdiction: Federal
Beginning January 1, 2023, the Clean Vehicle Credit provides a tax credit of up to $4,000 for the purchase of a pre-owned EV or FCEV. Eligible vehicles must be of a model year at least two years prior to the year of purchase and may not have a purchase price above $25,000. Individuals with a gross annual income below the following thresholds are eligible for the tax credit:
Only one tax credit may be claimed per vehicle. Individuals may not claim more than one pre-owned vehicle tax credit in a three-year period. (Reference Public Law 117-169)
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Federal | Commercial Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit | Incentives |
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Commercial Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit
Type: Incentives |
Jurisdiction: Federal
Beginning January 1, 2023, a tax credit will be available to businesses for the purchase of new EVs and FCEVs. Vehicles with a gross vehicle weight rating (GVWR) below 14,000 pounds (lbs.) must have a battery capacity of at least seven kilowatt-hours (kWh) and vehicles with a GVWR above 14,000 lbs. must have a battery capacity of at least 15 kWh. The tax credit amount is equal to the lesser of the following amounts:
Maximum tax credits may not exceed $7,500 for vehicles under 14,000 lbs. and $40,000 for vehicles above 14,000 lbs. Businesses may not combine this tax credit with the Clean Vehicle Tax Credit. (Reference Public Law 117-169)
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Federal | Heavy-Duty Zero Emission Vehicle (ZEV) and Infrastructure Grants | Incentives |
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Heavy-Duty Zero Emission Vehicle (ZEV) and Infrastructure Grants
Type: Incentives |
Jurisdiction: Federal
By February 12, 2023, the U.S. Environmental Protection Agency must create a grant program for heavy-duty ZEVs and associated infrastructure. Grant award amounts vary and may cover up to 100% of total project costs. Eligible project costs include:
Eligible applicants include state governments, municipalities, tribal governments, and non-profit school transportation associations. Additional funding is available for projects located in nonattainment communities. For more information, see the EPA Clean Heavy-Duty Vehicle Program website. (Reference Public Law 117-169) |
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Federal | Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Manufacturing Tax Credit | Incentives |
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Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Manufacturing Tax Credit
Type: Incentives |
Jurisdiction: Federal
Qualified advanced energy projects are eligible for a 30% tax credit for project investments to reequip, expand, or establish certain manufacturing facilities. Credits cannot be allocated to projects located in census tracts where projects have been previously allocated. A qualifying advanced energy project includes, but is not limited to, projects that reequip, expand, or establish a manufacturing or industrial facility for the production or recycling of light-, medium-, and heavy-duty EVs, FCEVs, EV charging stations, and hydrogen fueling stations. Additional terms apply. (Reference Public Law 117-169 and 26 U.S. Code 48C)
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Federal | Port Electrification Grants | Incentives |
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Port Electrification Grants
Type: Incentives |
Jurisdiction: Federal
The U.S. Environmental Protection Agency (EPA) must establish a competitive Clean Ports grant program for the purchase or installation of zero emission port equipment or technology. Eligible applicants must include port authorities, state governments, local governments, tribal governments, air pollution control agencies, and private entities that own, operate, or use port. Zero emission technology includes all-electric vehicles and fuel cell electric vehicles (FCEVs). Additional funding is available for projects located in nonattainment communities. For more information, see the EPA Ports Initiative website. (Reference Public Law 117-169) |