Federal Incentives
The federal government offers several beneficial programs for natural gas vehicle (NGV) drivers, those who buy or convert to NGVs. (For more information on state incentives, visit your state page.)
Income Tax Credit for Natural Gas Fueling Infrastructure
Public Law (PL) 109-58 provides for an income tax credit equal to 30% of the cost of natural gas refueling equipment, up to $30,000 for large stations and $1,000 for home refueling appliances. The credit became effective January 1, 2006, and expires December 31, 2011.
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% of the cost, whichever is smaller, for business property.
The credit was set to expire December 31, 2010, but was extended by Congress in December 2010 via the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (PL 111-312). This law also includes an incentive allowing companies to expense 100% of the cost of new capital acquisitions in 2011. For 2012, bonus depreciation is worth 50% of the cost of property placed in service.
Excise Tax Credit to the Seller of CNG and LNG
PL 109-59 provides for a tax credit of $0.50 per gasoline-gallon-equivalent of compressed natural gas (CNG) or liquid gallon of liquefied natural gas (LNG) sold for use as a motor vehicle fuel. The credit began October 1, 2006, and was extended as part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (PL 111-312). This law not only extends the credit for 2011, but also makes it retroactive for fuel sales or use during 2010. Even fuel sellers without tax liability, such as public school systems, can claim this credit.
New Alternative Transportation to Give Americans Solutions
(NAT GAS) Act
The 2011 Act, introduced by a large bipartisan coalition and backers of the Pickens Plan, would provide new federal incentives for NGVs including:
- Extending the vehicle purchase income tax credit by five years.
- Dedicated vehicles would receive an 80% tax credit for the incremental cost of the vehicle or 80% of the conversion cost.
- Bi-fuel vehicles would receive a 50% tax credit for the incremental cost of the vehicle or 50% of the conversion cost.
- Increasing the caps on the vehicle purchase income tax credit.
- Vehicles 8,500 pounds (lbs.) and less – cap at $7,500
- Vehicles 8,501 to 14,000 lbs. – cap at $16,000
- Vehicles 14,001 to 26,000 lbs. – cap at $40,000
- Vehicles 26,001 lbs. and over - $64,000
- Extending the Refueling Infrastructure Property Income Tax Credit by five years.
- Increases to lesser of 50% of the equipment cost or $100,000
- Tax credit also extends to home refueling units, up to $2,000
- Extending the existing Excise Tax Credit to the Seller of CNG or LNG by five years.