Federal NGV Tax Incentives

In an effort to reduce America’s dependence on foreign oil, reduce urban emissions and reduce greenhouse gases, the federal government offers vehicle buyers and owners a number of tax incentives to buy and operate natural gas vehicles. These include the following:

Income Tax Credits for Alternative Fuel Vehicles
PL 109-58 provides for an income tax credit for the purchase of a new, dedicated alternative fuel vehicle of 50 percent of the incremental cost of the vehicle, plus an additional 30 percent 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.
NGVAmerica Fact Sheet Alternative Fuel Vehicles

Income Tax Credits of Alternative Fuel Infrastructure
PL 109-58 provides for an income tax credit equal to 30 percent of the cost of natural gas refueling equipment, up to $30,000 in the case of large stations and $1,000 for home refueling appliances. The credit is effective on purchases placed in service after December 31, 2005 and expires December 31, 2010. The American Recovery and Reinvestment Act of 2009 (PL 111-5) increased the value of the credit for property placed in service during 2009 and 2010. The credit value for these years is $50,000 or 50 percent of the cost (whichever is smaller) for business property and $2,000 or 50% of the cost (whichever is smaller) for a home refueling appliances.
NGVAmerica Fact Sheet Alternative Fuel Infrastructure

Excise Tax Credit to the Seller of CNG or LNG
PL 109-59 provides for a tax credit of 50-cent 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 cents per gallon equivalent to 18.3 cents. The LNG rate would increase from 18.3 cents to 24.3 cents 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 December 31, 2009.
NGVAmerica Fact Sheet Fuel Tax Credit