Search Federal and State Laws and Incentives

Alternative Fuels Tax and Reporting

Excise taxes on alternative fuels are imposed on a gasoline gallon equivalent (GGE) basis. The tax rate for each alternative fuel type is based on the number of motor vehicles licensed in the state that use the specific fuel, not including vehicles the federal government owns or leases. The Arkansas Department of Finance and Administration (DFA) and the Arkansas State Highways and Transportation Department must prepare an annual report with the number of alternative fuel vehicles licensed in the state and the tax revenue generated. The DFA must establish the annual tax rate by April 1st. Licensed alternative fuel suppliers must pay alternative fuel taxes for product dispensed, sold to a dealer or user, or used in a motor vehicle owned or operated by the alternative fuel supplier. Alternative fuel suppliers must prepare a monthly report on the number of GGEs of alternative fuels sold and possess a sufficient number of credits (also known as sales tickets) to cover the alternative fuel sales tax. (Reference Arkansas Code 19-6-301, 26-56-502, 26-56-601, and 26-62-201 through 262-62-209)

Alternative Fuel Vehicle Conversion Notification

Any individual or company who converts a vehicle to operate on an alternative fuel must report the conversion to the Arkansas Department of Finance and Administration (DFA) within 10 days of the conversion. An owner or operator who fails to report such a conversion may be subject to a penalty. For more information, including reporting forms, see the DFA website. (Reference Arkansas Code 26-56-315 and 26-62-214)

Alternative Fuel Vehicle and Infrastructure Rebate Program

The Office of Energy, a division of the Arkansas Department of Environmental Quality, administers the Arkansas Alternative Fuel Vehicle Rebate Program (Program), funded by the Alternative Motor Fuel Development Fund. The Program provides 50% of the incremental cost, up to $4,500, to purchase a qualified hydrogen fuel cell, natural gas, or propane vehicle, 50% of the conversion cost, up to $2,500, for converting a hydrogen fuel cell, natural gas, or propane vehicle, and 50% of the incremental cost, up to $2,500, to purchase a qualified plug-in electric vehicle.

Rebates are available for natural gas and propane fueling stations in the amount of 75% of qualifying costs, up to $400,000, and up to 50% of qualifying costs for private and public electric vehicle supply equipment, up to $900 and $5,000 respectively. Compressed natural gas (CNG) must be delivered to a vehicle at 3,000 pounds (lbs.) per square inch and metered on a gasoline gallon equivalent (GGE); liquefied natural gas (LNG) must be metered on a diesel gallon equivalent (DGE). One GGE of CNG is equal to 5.66 lbs. and one DGE of LNG is equal to 6.22 lbs.

The Office of Energy reviews and processes vehicle rebate applications on a first-come, first-served basis. The Program is currently closed and no funding is available (verified April 2018)

(Reference House Bill 1735, 2017, and Arkansas Code 15-10-901 to 15-10-904 and 19-5-1249)