Oklahoma Tax Incentives

Alternative Fuel Vehicle (AFV) Tax Credit

For tax years beginning before January 1, 2010, Oklahoma provides a one-time income tax credit for 50% of the cost of converting a vehicle to operate on an alternative fuel, or for 50% of the incremental cost of purchasing a new Original Equipment Manufacturer AFV. The state also provides a tax credit for 10% of the total vehicle cost, up to $1,500, if the incremental cost of a new AFV cannot be determined or when an AFV is resold, as long as a tax credit has not been previously taken on the vehicle. The alternative fuels eligible for the credit are compressed natural gas, liquefied natural gas, liquefied petroleum gas, methanol, and electricity. For qualified electric vehicles propelled by electricity only, the basis for the credit is the full purchase price of the vehicle. For vehicles also equipped with an internal combustion engine, such as a hybrid electric vehicle, the basis for the credit is limited to the portion of such motor vehicle which is attributable to the propulsion of the vehicle by electricity. For more information, see Oklahoma Income Tax Form 511CR (PDF 219 KB). (Reference Senate Bill 1558, 2008, and Oklahoma Statutes 68-2357.22) Download Adobe Reader

Alternative Fueling Infrastructure Tax Credit

The state provides a tax credit for up to 50% of the cost of installing alternative fueling infrastructure. The tax credit may be carried forward for up to three years and expire January 1, 2010. The alternative fuels eligible for the credit include compressed natural gas, liquefied natural gas, liquefied petroleum gas, methanol, and electricity. (Reference Senate Bill 1558, 2008, and Oklahoma Statutes 68-2357.22)

Biodiesel Production Tax Credit

For tax years beginning after December 31, 2004, and before January 1, 2013, a biodiesel (B100) production facility is allowed a credit of $0.20 per gallon of biodiesel produced. An eligible biodiesel facility must produce at least 25% of its nameplate design capacity for at least six months after the first month for which it is eligible to receive the credit, on or before December 31, 2008. The credit is allowed for 60 months beginning with the first month in which the facility is eligible to receive the credit and ending not later than December 31, 2012. An eligible facility may also receive an expansion credit of $0.20 per gallon of biodiesel produced in excess of the original nameplate design capacity that results from expansion of the facility before December 31, 2008. Beginning January 1, 2013, a biodiesel facility may receive a credit of $0.075 per gallon of biodiesel for new production for a period not to exceed 36 consecutive months. If the credit allowed exceeds the amount of income taxes due, the excess amount may be carried forward as a credit against subsequent income tax liability for a period not to exceed five years. Additional restrictions apply(Reference House Bill 1956, 2008, and Oklahoma Statutes 68-2357.67)

Ethanol Production Tax Credit

For tax years beginning after December 31, 2003, and before January 1, 2013, an ethanol production facility is allowed a tax credit in the amount of $0.20 per gallon of ethanol produced, for 60 months beginning with the first month in which the facility is eligible to receive such credit. The credit may only be claimed if the ethanol facility maintains an average production rate of at least 25% of its nameplate design capacity for at least six months after the first month for which it is eligible to receive the credit, on or before December 31, 2010. Producers are also eligible for an expansion credit of $0.20 per gallon of ethanol produced in excess of the original nameplate capacity that results from expansion of the facility before December 31, 2008. Beginning January 1, 2013, an ethanol facility is eligible for a credit of $0.075 per gallon of ethanol, before denaturing, for new production for a period not to exceed 36 consecutive months. (Reference Oklahoma Statutes 68-2357.66)

Ethanol Fuel Retailer Tax Credit

A retailer of ethanol-blended fuel (blended gasoline consisting of not more than 15% ethyl alcohol by volume) may claim a motor fuel tax credit of $0.016 for each gallon of ethanol-blended fuel sold in Oklahoma, if the retailer provides a price reduction to the purchaser of the ethanol fuel in the same amount. This incentive is effective unless the federal government mandates the use of reformulated fuel in an area within Oklahoma that is in non-attainment with the National Ambient Air Quality Standards. (Reference Oklahoma Statutes 68-500.10-1)