Clean-fuel vehicles are motor
vehicles designed to be propelled by one of the following
- Natural gas (e.g., CNG)
- Liquified natural gas (LNG)
- Liquified petroleum gas (LPG)
- 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.,
|The following requirements must also be met for the vehicle
- 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
- 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.
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.
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.