Clean-fuel vehicles are motor
vehicles designed to be propelled by one of the following
fuels:
- Natural gas (e.g., CNG)
- Liquified natural gas (LNG)
- Liquified petroleum gas (LPG)
- Hydrogen
- Electricity (e.g., some
gasoline/electric hybrids). All-electric vehicles are
not eligible for this incentive; they are eligible for the
electric vehicle tax credit.
- Any other fuel that is at least 85% alcohol or ether (e.g.,
E85)
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The following requirements must also be met for the vehicle
to qualify:
- You must purchase the vehicle new and for your own use,
not for resale.
- You must drive it mostly in the United States.
- The vehicle must meet all federal and state emissions
requirements.
- Government agencies, tax exempt organizations, and foreign
entities are not eligible.
- The vehicle must have four or more wheels and be manufactured
primarily for use on public streets, roads, and highways
(it does not include a vehicle operated exclusively on a
rail or rails).
If any of these conditions change within 3 years of purchase,
you may have to return some of the money saved by the deduction.
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The deduction is equal to the cost of the vehicle's engine,
the equipment used to store or deliver the fuel, and the equipment
used to exhaust combusted gases, up to a maximum of $2,000
for vehicles places in service by the end of 2005.
For vehicles that may be propelled by both a clean-burning
fuel and any other fuel, the deduction is limited to the additional
cost of permitting the use of the clean-burning fuel, with
the same maximum deductions detailed above.
The IRS determines the maximum deduction for specific gasoline-electric
hybrid models. Click here for
more information on hybrids. |
If you bought your vehicle prior to 2006, you must fill
out an amended tax return Form
1040X for that year to claim the deduction.
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Some state and local governments also provide incentives
for AFVs. Check with your state or local government or view
the U.S. Department of Energy's list of State
& Federal Incentives & Laws.
AFVs are not eligibe for electric vehicle tax credits. |