Federal Tax Credits

    Electric Vehicles

    • Tax Credit: $2,500 to $7,500 per new EV purchased for use in the U.S.
      • To find out specific tax credit amounts for individual vehicles, visit FuelEconomy.gov’s Tax Credits for Electric Vehicles and Tax Credits for Plug-in Hybrids pages.
      • Phased out manufacturers: Tesla, GM
      • Additional Resources:
        • To claim the credit, fill out IRS Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit.
        • For vehicles acquired for personal use, report the credit from Form 8936 on the appropriate line of your Form 1040, U.S. Individual Income Tax Return.
        • For vehicles purchased in 2010 or later, this credit can be used toward the alternative minimum tax (AMT).
        • To learn more about the law, visit the IRS’s Plug-in Electric Drive Vehicle Credit webpage.

    Natural Gas / Biofuels / Propane

    • Tax Credit: $0.50 per gallon | Applies to alternative fuel sold for use or used as a fuel to operate a motor vehicle
      • 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
      • Notes:
        • Propane/natural gas sold after 2015: tax credit based on 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.
        • Eligible entity 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.
      • Additional Resources:
    • Tax Credit: $1.00 per gallon | Applies to biodiesel and biodiesel mixtures
    • Tax Credit: $0.10 per gallon | Applies to small agri-biodiesel producers 

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