Oklahoma Extends, Modifies Alternative Fuel Tax Credits


Gov. Kevin Stitt, R-Okla., has signed into a law a bill that extends and alters Oklahoma’s tax credits for alternative fuel vehicles.

For “certain qualified clean-burning motor vehicles and related assets,” the legislation extends the tax credit sunset from tax year 2019 to tax year 2027; alters the credit calculation percentages; and enacts a statewide cap, effective for tax year 2020 and thereafter.

Under the law, which is effective Jan. 1, 2020, “clean-burning” is defined as vehicles powered by compressed natural gas, liquefied natural gas, liquefied petroleum gas and electricity.

Instead of the current credit of 45% of the cost of the vehicle, the credit will be calculated according to weight: maximum credit amounts of $5,500 for vehicles under 6,000 lbs.; $9,000 for 6,001-10,000 lbs.; $26,000 for 10,001-26,500 lbs.; and $50,000 for 26,501 lbs. and above.

Further, the infrastructure component of the state’s tax credits will be cut from 75% to 45% of the cost of the “qualified clean-burning motor vehicle fuel property.” This includes CNG, LNG or LPG refueling “for commercial purposes or for a fee or charge” or “metered-for-fee, public-access” EV charging,” the bill says.

A statewide cap of $20 million will go into effect for tax year 2020. If credits reach 80% of the total annual limit, the Oklahoma Tax Commission must notify the Office of the State Secretary of Energy and Environment. If credits exceed $20 million, the tax commission will annually calculate how much to reduce them in order to stay within the limit.

The partisan bill, H.B.2095, was sponsored by Republican Rep. Terry O’Donnell and Sen. Stephanie Bice and co-sponsored by Republican Reps. Mark McBride and Scott Fetgatter.

Applauding the passage of the legislation is NGVAmerica, whose president, Dan Gage, says the bill will “ensure that Oklahoma will consistently lead the country in supporting natural gas vehicles as the best path to build demand for an Oklahoma-produced product, clean the environment through targeting the highest-mileage and dirtiest vehicles, and provide economic benefit to the state and its constituents.”

He adds, “The bill received industry-wide support from public, private and nonprofit sectors that understand the need for this crucial infrastructure and the use of natural gas vehicles.”

According to a revenue impact statement from the tax commission, the expenditure in tax year 2016 for this credit totaled $7.9 million. Importantly, the commission does not expect this number to “increase significantly” or affect the state’s revenue.

“With no expectation of increased state expenditures and no impact to state revenue, as proven by the Oklahoma Tax Commission,” Gage says, “we look forward to highlighting Oklahoma’s efforts as a model for the rest of the country to follow.”

Another supporter of the bill, Fred Morgan, president and CEO of the State Chamber of Oklahoma, comments, “The purpose of most tax incentives is to boost job creation, capital investment and economic activity. By signing H.B.2095 into law, Governor Stitt clearly recognizes the success that compressed natural gas and electric vehicle tax credits have in creating economic activity.”

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