Federal Tax Credit for Natural Gas Vehicles
Dedicated alternative fuel vehicles, placed in service after December 31, 2005, qualify for up to 80% of the incremental cost. Credit value is on sliding scale based on vehicle weight and emission standards that are available for that particular vehicle.
| Vehicle Size | Incremental Cost Cap | 50% Credit | 80% Credit |
|---|---|---|---|
| Light-Duty vehicles up to 8,500 pounds | $5,000 | $2,500 | $4,000 |
| Medium-Duty vehicles up to 14,000 pounds | $10,000 | $5,000 | $8,000 |
| Medium-Heavy-Duty vehicles up to 26,000 pounds | $25,000 | $12,500 | $20,000 |
| Heavy-Duty vehicles over 26,000 pounds | $40,000 | $20,000 | $32,000 |
Seller of vehicle can take credit if buyer is a tax exempt entity
- Tax exempt entities can negotiate with seller to capture value of tax credit
- This provision allows cities, municipalities and special district fleets like schools to take advantage of incentives
Federal Motor Fuels Excise Tax Credit
This provision provides $.50 excise tax credit per gallon of Liquefied Natural Gas (LNG) or gasoline-gallon-equivalent of Compressed Natural Gas (CNG), payable to the seller or the user can take credit (e.g. fleet operates its own station)
- Credit took effect October 1, 2006
- Businesses and tax-exempt entities (Federal, State and local governments) – excise tax offset against alternative fuel used or sell and the remainder as a refundable credit
- Individual using fuel for personal vehicles – incentive is limited to an excise tax offset
- Tax exempt entities – Full credit will be paid in form of "rebate"
- Entities that operate their own stations get full credit as users of fuel before sale
- Those who purchase from fuel provider will benefit from lower fuel costs from seller
- Measure increases CNG motor fuels excise tax to same as gasoline ($.183) and LNG tax to same as diesel ($.243), which offsets some benefit of the tax credit for tax paying entities
CNG Fueling Station Credit
- Federal tax credit equal to 50% of refueling equipment placed into service during 2009 and 2010, maximum $50,000 credit per year
- Federal tax credit equal to 30% of refueling equipment placed into service during 2011, maximum $30,000 credit per year
- Fueling station owners who install qualified equipment at multiple sites are allowed to use the credit towards each location
- The existing $100,000 tax deduction for refueling equipment is repealed
Bonus Depreciation –Vehicles and Equipment
- For 2011, bonus depreciation is worth 100% of the cost of property placed in service. The new law includes an incentive allowing companies to expense 100% of the cost of new capital acquisitions in 2011. The bonus depreciation provision also extends to capital equipment placed in service after December 8, 2010.
- For 2012, bonus depreciation is worth 50% of the cost of property placed in service.
Source: Natural Gas Vehicles for America
Incentive information is provided as a service to our customers. Yankee Gas is not responsible for errors, omissions or changes.