Alt-Fuel Tax Credits Extended in Newly Signed Bipartisan Budget Bill

President Donald Trump has signed into law the Bipartisan Budget Act of 2018, a long-term budget agreement that includes extensions of lapsed tax credits for alternative fuel vehicles and refueling infrastructure retroactively for 2017.

On Friday, the bill, H.R.1892, was passed in the House (240-186) and the Senate (71-28) and later signed in the White House. For the alt-fuels sector, the bill includes extensions for tax credits that had expired at the end of 2016. This includes provisions for new qualified fuel cell vehicles; non-hydrogen alt-fuel vehicle refueling properties (hydrogen refueling infrastructure was already eligible for the tax credits); biodiesel and renewable diesel; second-generation biofuel producers; and two-wheeled plug-in electric vehicles (EVs).

Importantly, the bill also reinstates the $0.50/gallon alternative fuels tax credit (AFTC). As explained by the Alternative Fuels Data Center (AFDC), part of the U.S. Department of Energy’s Vehicle Technologies Office, the incentive, which had expired on Dec. 31, 2016, is applicable to fuel sold or used through Dec. 31, 2017. The tax credit is available for “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.”

The AFDC notes that the Treasury will issue guidance for how to submit claims by March 11. Claims can be submitted for a 180-day period beginning no later than 30 days after the Treasury issues guidance; the claims will be paid no later than 60 days after receipt, says the AFDC.

A Senate Finance Committee summary, as provided by Forbes, lays out the further details of each alt-fuel provision of the bill:

  • Alt-fuel refueling: This provision extends through 2017 the credit for the installation of non-hydrogen alt-fuel vehicle refueling infrastructure. Taxpayers can get a credit of up to 30% of the cost of the installation of a qualified property.
  • Fuel cell vehicles: This provision extends through 2017 the credit for purchases of new qualified fuel cell motor vehicles. It allows a credit of $4,000-$40,000, depending on vehicle weight.
  • EVs: This provision extends through 2017 the 10% credit for two-wheeled plug-in EVs (with a cap of $2,500).
  • Second-generation biofuels: This provision extends through 2017 the credit for the production of cellulosic biofuels.
  • Biodiesel and renewable diesel: This provision extends through 2017 the existing $1.00/gallon credit for biodiesel and biodiesel mixtures, as well as the small agri-biodiesel producer credit of $0.10/gallon. It also extends through 2017 the $1.00/gallon production tax credit for diesel fuel created from biomass. In addition, it extends through 2017 the fuel excise tax credit for biodiesel mixtures.

In December, in an effort spearheaded by the National Propane Gas Association (NPGA) and NGVAmerica, more than 300 organizations representing users, retailers, customers, fleet managers, utilities and producers of clean alternative fuels, including natural gas and propane, signed a letter urging Congress to reinstate the AFTC. The letter asked Congress to extend the AFTC for two years and said that a full five-year extension would provide business certainty and add a significant contribution to America’s economic growth.

In a statement on the passage of the new budget act, Daniel Gage, president of NGVAmerica, says, “The bipartisan budget agreement wisely includes provisions aimed to promote the use of clean, domestic natural gas in transportation. By extending the alternative fuels tax credit for natural gas vehicles and the alternative fuel vehicle refueling property tax credit for natural gas refueling stations retroactively for 2017, Congress signals how important clean technology natural gas vehicles are to growing our economy, improving our air quality and enhancing our energy security while reducing our carbon footprint.”

However, regarding the decision to only retroactively extend the credits for 2017, Gage says, “We intend to continue working with congressional leaders to extend these proven clean air investment incentives for 2018 and beyond. Moving forward, our industry needs certainty and deserves parity with other zero-emissions equivalent technologies.”

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