U.S. Sens. Chuck Grassley, R-Iowa, and Ron Wyden, D-Ore., have introduced bipartisan legislation to retroactively extend tax provisions that expired at the end of 2017 and 2018 through the balance of this year. Importantly, this includes the $0.50/gallon Alternative Fuel Tax Credit (AFTC).
For the alternative fueling sector, the legislation would extend through 2019 the following expired tax provisions:
- A $0.50/gallon excise-tax credit or payment for alternative fuel and a $0.50/gallon credit for alternative fuel mixed with traditional fuel. The provision also specifies that liquefied petroleum gas, compressed or liquefied natural gas, and compressed or liquefied gas derived from biomass are not eligible to be included in an alternative fuel mixture.
- A credit for purchases of new qualified fuel cell motor vehicles. It allows a credit of $4,000-$40,000, depending on the weight of the vehicle, for the purchase. Other vehicles, depending on their fuel efficiency, qualify for an additional $1,000-$4,000.
- A credit for the installation of alternative fuel vehicle refueling property placed in service before 2020. Fuels include ethanol, biodiesel, natural gas, hydrogen and electricity, and the credit is capped at $30,000/location for business property and $1,000 for property installed at a principal residence.
- A 10% credit for highway-capable, two-wheeled plug-in electric vehicles (capped at $2,500).
- A $1.01/gallon nonrefundable income tax credit for second-generation biofuel sold at retail into the fuel tank of a buyer’s vehicle, or second-generation biofuel mixed with gasoline or a special fuel and sold or used as a fuel. This was previously known as the cellulosic biofuel producer credit.
- A $1/gallon tax credit for biodiesel and biodiesel mixtures, and the small agri-biodiesel producer credit of 10 cents/gallon. Additionally, the provision treats renewable diesel the same as biodiesel, except there is no small producer credit.
In total, the legislation covers 26 provisions that expired at the end of 2017 and three others that expired at the end of 2018. It also focuses on disaster-relief tax benefits.
“Congress needs to get out of this bad habit of regular retroactive extensions of these tax provisions,” says Grassley, chairman of the Senate Finance Committee. “The whole point of these federal tax incentives is to encourage certain behaviors, especially investments in alternative energies, energy efficiency and transportation. The best way to do that is ahead of time, not retroactively.
“But it’s also the case that many of these industries made business decisions last year based on that reasonable expectation that they would be extended, since it’s what Congress has consistently done in the past,” he continues. “I hope the House of Representatives acts soon, since taxpayers affected by these expired provisions have to file their tax returns in the coming weeks. Thousands of jobs across the country depend on it.”
“It’s past time to kick the addiction to short-term tax policies, but until Congress is able to break this cycle for good, taxpayers deserve certainty about what they’ll owe,” says Wyden, ranking member of the Senate Finance Committee.
Last month, nearly 700 users, retailers, customers, fleet managers, utilities and producers of alternative transportation fuels joined Natural Gas Vehicles for America (NGVAmerica) to call on Congress to act on a reinstatement of the AFTC.
In response to the newly proposed bill, Daniel Gage, president of NGVAmerica, praises the senators’ “foresight and commitment.”
“Their work to include the AFTC in this package recognizes the importance of consistent federal tax policy that clears our air, combats climate change and supports the expanded use of clean transportation technologies,” he says.
Gage notes that the AFTC “benefits consumers and fleets of all sizes – both public and private – and allows operators to make needed investments in cleaner, American-made natural gas vehicles with certainty.”
He concludes, “Since filing season is upon us and tax code clarity is vital, we urge the House and Senate to consider this proposal as quickly as possible.”
The full text of the bill can be found here.