Current NGV Tax Deductions Extended

Last night, the House and Senate overwhelmingly passed an expanded middle class tax cut bill.  Included in that bill are a number of extensions to existing tax credits/deductions that were scheduled to be phased out. One of those is the tax deduction for Qualified Clean-Fuel Vehicle Property (e.g., NGVs).

Under current law, taxpayers may deduct a portion of the cost of Clean Fuel Vehicle Property when it is placed in service. The deduction was to be phased down in the years 2004 through 2006, and eliminated altogether for purchases after December 31, 2006. The middle class tax cut bill repeals the phase down of the allowable deduction for clean-fuel vehicles in 2004 and 2005. Therefore, once the bill is signed by the President, a taxpayer that purchases a qualifying vehicle may claim 100 percent of the otherwise allowable deduction for vehicles purchased in 2004 and 2005.  For vehicles purchased in 2006 the deduction remains at 25 percent of the otherwise allowable amount as under present law.

A Qualified Clean-fuel Vehicle Property includes motor vehicles that use certain clean-burning fuels, such as natural gas and liquefied natural gas. The maximum amount of the deduction is:

·         $50,000 for a truck or van with a gross vehicle weight over 26,000 pounds or a bus with seating capacities of at least 20 adults;

·         $5,000 in the case of a truck or van with a gross vehicle weight between 10,000 and 26,000 pounds; and

·         $2,000 in the case of any other motor vehicle.

The President is expected to sign the bill into law quickly. 

For more information contact Paul Kerkhoven @ (202) 824-7363 or pkerkhoven@ngvc.org.