U.S. Congress Extends Alternative Fuel and Infrastructure Tax Credits
February 28, 2013

At the beginning of 2013, President Obama signed into law The American Taxpayer Relief Act of 2012 that provides one-year extensions for several tax credits, including those for compressed natural gas (CNG), liquefied natural gas (LNG), and propane (liquefied petroleum gas or LPG).  If you use alternative fuel in your fleets, you may be eligible for a tax credit.

Specifically, the law provides a 50-cent per gallon gasoline equivalent alternative-fuel tax credit for CNG, LNG, and propane, and a $30,000 infrastructure tax credit. The tax credits are extended until Dec. 31, 2013, and are retroactive for all of 2012.  Other actions include:

  • Alternative fuel vehicle refueling property (non-hydrogen refueling property). The Act extends until Dec. 31, 2013, the 30 percent investment tax credit for alternative-fuel vehicle refueling property.
  • Plug-in electric motorcycles and highway vehicles. The Act reforms and extends until Dec. 31, 2013, the individual income tax credit for highway-capable plug-in motorcycles and 3-wheeled vehicles.
  • Cellulosic biofuels producer tax credit.  The Act extends until Dec. 31, 2013, the $1.01 per gallon production tax credit for cellulosic biofuel produced through 2013.  It also expands the definition of qualified cellulosic biofuel production to include algae-based fuel.
  • Incentives for biodiesel and renewable diesel. The Act extends until Dec. 31, 2013, the $1.00 per gallon tax credit for biodiesel, as well as the small agri-biodiesel producer credit of 10 cents per gallon.  It also extends until Dec. 31, 2013, the $1.00 per gallon tax credit for diesel fuel created from biomass.
  • Incentives for alternative fuel and alternative fuel mixtures (other than liquefied hydrogen).  The Act extends until Dec. 31, 2013, the $0.50 per gallon alternative fuel tax credit and alternative fuel mixture tax credit.  This credit can be claimed as a nonrefundable excise tax credit or a refundable income tax credit.

More Information

Here are the excise tax rates, as pasted from page 4 of Joint Committee on Taxation publication (p. 4 of JCS-1-11):

f. Compressed natural gas (“CNG”) (sec. 4041) ………….  18.3 cents per gasoline gallon equivalent (GGE = 126.67 c.f.)
g. Liquefied petroleum gas (“LPG”) (sec. 4041) ………….  18.3 cents per gallon
h. Liquefied natural gas (“LNG”) (sec. 4041) ………… 24.3 cents per gallon

 Here are the tax credits (p. 5 of JCS-1-11):

Tax credits:
e. Alternative fuels and alternative fuel mixtures (LPG, “P Series” fuels, CNG, LNG, liquefied hydrogen, liquid fuel derived from coal,11 and liquid fuel derived from biomass) (sec. 6426 and 6427(e)) …………… 50 cents per gallon (refundable excise tax credit)

Details of the American Taxpayer Relief Act can be found here. The Congressional Research Service published a related report (click here) on Jan. 10, 2013, summarizing the wide array of federal incentives that support the development and deployment of alternatives to conventional fuels and engines in transportation.

For more information, contact Leah Pilconis at pilconisl@agc.org.