Given that a governmental authority (California) has mandated lower
vehicle emissions by 2003 and, vehicle manufacturers must develop new technology
to comply with this mandate, it is only logical that the federal government
has proposed several tax incentives to encourage consumers to purchase
alternative-fuel (green) vehicles.
Two tax incentives already included in current federal law are:
(1) Tax credit for electric vehicles (Section
30). Section 30 provides a 10 percent tax credit for the cost of
a qualified electric vehicle up to a maximum tax credit of $4,000.
A qualified electric vehicle is one that is powered primarily by an electric
motor and its original use commences with the taxpayer. The tax credit
is currently scheduled to phase out at the rate of 25 percent per year
from 2002 through 2004 and will end in 2005.
(2) Immediate Expensing of clean-fuel vehicles
(Section 179A). The costs of qualified clean-fuel vehicles
can be expensed when the property is placed in service. Qualified
clean-fuel vehicles include vehicles which use clean-burning fuels such
as natural gas, electricity, methanol, etc. The maximum expensing
deduction ranges from $2,000 to $50,000 depending on the size of the vehicle
with an overall maximum expensing deduction of $100,000 per taxpayer allowed
each year. The expensing deduction is not available for qualified
electric vehicles covered in Section 30 above. The expensing deduction
is currently scheduled to phase out at the rate of 25 percent per year
from 2002 through 2004 and will end in 2005.
The following proposed tax credits for the purchase of
alternative-fuel (green) vehicles are included in the President's Fiscal
Year 2000 Budget Proposal.
(1) Tax Credit for electric vehicles.
The current phase out of the tax credit for the purchase of electric vehicles
would be eliminated and the maximum tax credit of $4,000 would be available
for purchases made through 2006.
(2) Tax credits for hybrid vehicles.
Proposed tax credits include: a. $1,000 tax credit for a hybrid
vehicle that is one-third more fuel efficient than a comparable gasoline-powered
vehicle, b. $2,000 tax credit for a hybrid vehicle that is two-thirds
more fuel efficient than a comparable gasoline-powered vehicle, c.
$3,000 tax credit for a hybrid vehicle that is twice as fuel efficient
as a comparable gasoline-powered vehicle and, d. $4,000 tax credit
for a hybrid vehicle that is three times as fuel efficient as a comparable
gasoline-powered vehicle. To qualify for a tax credit, a hybrid vehicle
would have to be powered by an alternative-fuel source along with a gasoline-powered
engine. In addition, a vehicle which qualifies for the electric vehicle
credit or the clean-fuel expensing deduction would not qualify for any
of the hybrid tax credits. The $1,000 credit would be effective for
purchases during the period 2003 through 2004, the $2,000 credit for purchases
during the period 2003 through 2006, the $3,000 credit for purchases during
the period 2004 through 2006, and the $4,000 credit for purchases from
2004 through 2006.
REFERENCE--Description of Revenue Provisions Contained in the
President's Fiscal Year 2000 Budget Proposal, Joint Committee on Taxation,
Washington, February 22, 1999.
BACK
|
