Alternative Fuel Tax Incentives Update

    Clean Transportation Industry Wins in Final FY 2020 Spending Bill

    DEC. 30 UPDATE: The Senate has passed the bill, and it has been signed into law. More information from the Alternative Fuels Data Center:

    NOTE: This incentive originally expired on December 31, 2017, but was retroactively extended through December 31, 2020, by Public Law 116-94.

    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 Public Law 116-94, Public Law 115-123, Public Law 114-113, and 26 U.S. Code 6426)

    Point of Contact
    Excise Tax Branch
    U.S. Internal Revenue Service Office of Chief Counsel
    Phone: (202) 317-6855

    The clean transportation energy industry won several big victories this week as the House and Senate reached an agreement on an FY2020 spending bill. The House has passed the bill on Tuesday, with the Senate expected to approve it, and the President expected to sign it into law before the December 20th funding deadline. The bill includes a number of key provisions, which TEP has been suggesting for several years.

    The bill extends key alternative fuel tax incentives that have been expired since the end of 2017. Specifically, it extends:

    • the $1.00-per-gallon tax credit for biodiesel and biodiesel mixtures, and the small agri-biodiesel producer credit of 10 cents per gallon, retroactively for 2018 and 2019 and prospectively through 2022;
    • the alternative fuel excise credit retroactively for 2018 and 2019 and through 2020;
    • the alternative fuel infrastructure credit retroactively for 2018 and 2019 and through 2020; and
    • the credit for qualified fuel cell vehicles retroactively for 2018 and 2019 and through 2020.

    The bill also:

    • includes $40 million for the DOE Clean Cities program – a nearly $3 million increase over last year;
    • includes $87 million for the EPA Diesel Emission Reduction grants; and
    • requires the Federal Highway Administration to approve all clean vehicle projects submitted prior to April 17, 2018, using the previous criteria (final assembly in the United States) and it directs the agency to review and respond to Buy America waiver requests within 60 days of submission.

    Read More

    Read more on this topic:

    EV tax credits were not extended in the new spending bill that extended tax credits for other alternative fuels. So they remain on their original phase-out schedule by the amount of cars each company has in production:

    Tesla, GM Lose Bid To Raise Ceiling For Federal EV Tax Credit:

    Electric Vehicle Tax Credits: What You Need to Know:

    Want to learn more? Attend the Energy Independence Summit 

    Attending the annual Energy Independence Summit in DC is a great way to support alternative fuels and Clean Cities. The relationships that past attendees have built with their House and Senate offices and their ability to educate them about their local and regional clean transportation projects has been critical to Transportation Energy Partners' success in improving federal policies and funding.

    This year the Energy Independence Summit will return to the Westin Georgetown. The group rates ARE ALREADY SELLING OUT - make your hotel reservations right away!!

    Please contact  Ken Brown at Transportation Energy Partners at [email protected] or (202) 674-7777 if you have questions or would like additional information about the Summit. We look forward to seeing you in DC in February!

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