Federal Tax Incentives:
Alternative Motor Vehicle Credit (IRC § 30B(b))
"New Qualified Fuel Cell Motor Vehicle" (IRC § 30B(b))
The Energy Policy Act of 2005 first established a credit for taxpayers who purchase new qualified fuel cell motor ("energy efficient ") vehicles used predominantly within the United States pursuant to IRC § 30B(a)(1). In general, the eligible credit amount per qualified "New Qualified Fuel Cell Motor Vehicle" may range from $4,000 to $44,000 dependent on the type of vehicle, its gross vehicle weight, and fuel economy classification as further outlined below.
In general, the IRC § 30B(b) credit for New Qualifying Fuel Cell Motor Vehicles applies to vehicles purchased before January 1, 2022. Although the credit deadlines are based on when the vehicle is purchased, the credit is claimed for the year the vehicle is placed in service (IRC § 30B(a)). For example, if a taxpayer purchases a new qualifying fuel cell motor vehicle in 2021 and places it in service in 2022, the credit is claimed on the taxpayer’s 2022 return.
Pursuant to IRC § 30B(b)(3), the term “new qualified fuel cell motor vehicle” means a motor vehicle—
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which is propelled by power derived from 1 or more cells which convert chemical energy directly into electricity by combining oxygen with hydrogen fuel which is stored on board the vehicle in any form and may or may not require reformation prior to use,
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which, in the case of a passenger automobile or light truck, has received on or after the date of the enactment of this section a certificate that such vehicle meets or exceeds the Bin 5 Tier II emission level established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle,
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the original use of which commences with the taxpayer,
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which is acquired for use or lease by the taxpayer and not for resale, and
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which is made by a manufacturer.
The term “motor vehicle” means any vehicle which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels. See IRC § 30B(h)(1). Moreover, in general, IRC § 30B(h)(10) provides a motor vehicle shall not be considered eligible for a credit under this section unless such vehicle is in compliance with—
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the applicable provisions of the Clean Air Act for the applicable make and model year of the vehicle (or applicable air quality provisions of State law in the case of a State which has adopted such provision under a waiver under section 209(b) of the Clean Air Act), and
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the motor vehicle safety provisions of sections 30101 through 30169 of title 49, United States Code.
Credit Calculation Summary
The amount of the new qualified fuel cell motor vehicle credit varies dependent on the applicable vehicle's gross weight and fuel efficiency based on the following:
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(1) the gross vehicle weight; and
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IRC § 30B(b)(1) states, in general, the new qualified fuel cell motor vehicle credit determined with respect to a new qualified fuel cell motor vehicle placed in service by the taxpayer during the taxable year is—
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$8,000 ($4,000 in the case of a vehicle placed in service after December 31, 2009), if such vehicle has a gross vehicle weight rating of not more than 8,500 pounds,
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$10,000, if such vehicle has a gross vehicle weight rating of more than 8,500 pounds but not more than 14,000 pounds,
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$20,000, if such vehicle has a gross vehicle weight rating of more than 14,000 pounds but not more than 26,000 pounds, and
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$40,000, if such vehicle has a gross vehicle weight rating of more than 26,000 pounds.
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(2) its designed fuel economy ("fuel efficiency") in comparison to the "2002 model year city fuel economy" benchmark as defined in IRC § 30B(c)(2)(A)(ii). The 2002 model year city fuel economy with respect to a vehicle shall be determined on a gasoline gallon equivalent basis as determined by the Administrator of the Environmental Protection Agency using the tables provided in IRC § 30B(b)(2)(B) with respect to such vehicle.
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The amount of the credit with respect to a new qualified fuel cell motor vehicle which is a passenger automobile or light truck shall be increased by the following (IRC § 30B(b)(2)(A)):
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$1,000, if such vehicle achieves at least 150% but less than 175% of the 2002 model year city fuel economy,
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$1,500, if such vehicle achieves at least 175% but less than 200% of the 2002 model year city fuel economy,
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$2,000, if such vehicle achieves at least 200% but less than 225% of the 2002 model year city fuel economy,
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$2,500, if such vehicle achieves at least 225% but less than 250% of the 2002 model year city fuel economy,
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$3,000, if such vehicle achieves at least 250% but less than 275% of the 2002 model year city fuel economy,
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$3,500, if such vehicle achieves at least 275% but less than 300% of the 2002 model year city fuel economy, and
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$4,000, if such vehicle achieves at least 300% of the 2002 model year city fuel economy.
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IRC § 30B(h)(3) Other Terms — The terms “automobile”, “passenger automobile”, “medium duty passenger vehicle”, “light truck”, and “manufacturer” have the meanings given such terms in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.).
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IRC § 30B(h)(2) City Fuel Economy — The city fuel economy with respect to any vehicle shall be measured in a manner which is substantially similar to the manner city fuel economy is measured in accordance with procedures under part 600 of subchapter Q of chapter I of title 40, Code of Federal Regulations, as in effect on the date of the enactment of this section.
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In the case of a passenger automobile (I.R.C. § 30B(b)(2)(B)(i)), the 2002 model year city fuel economy with respect to a vehicle shall be determined in accordance with the following tables (IRC § 30B(b)(2)(B)(i))
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For purposes of the increased credit for fuel efficiency, the following vehicle inertia weight classes and referenced the 2002 model year city fuel economy applies to passenger automobile(s) (IRC § 30B(b)(2)(B)(i)):
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1,500 or 1,750 lbs --- 45.2 mpg
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2,000 lbs --- 39.6 mpg
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2,250 lbs --- 35.2 mpg
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2,500 lbs --- 31.7 mpg
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2,750 lbs --- 28.8 mpg
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3,000 lbs --- 26.4 mpg
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3,500 lbs --- 22.6 mpg
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4,000 lbs --- 19.8 mpg
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4,500 lbs --- 17.6 mpg
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5,000 lbs --- 15.9 mpg
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5,500 lbs --- 14.4 mpg
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6,000 lbs --- 13.2 mpg
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6,500 lbs --- 12.2 mpg
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7,000 to 8,500 lbs --- 11.3 mpg
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For purposes of the increased credit for fuel efficiency, the following vehicle inertia weight classes and referenced the 2002 model year city fuel economy applies to light truck(s) (IRC § 30B(b)(2)(B)(ii)):
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1,500 or 1,750 lbs --- 45.2 mpg
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2,000 lbs --- 39.6 mpg
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2,250 lbs --- 35.2 mpg
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2,500 lbs --- 31.7 mpg
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2,750 lbs --- 28.8 mpg
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3,000 lbs --- 26.4 mpg
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3,500 lbs --- 22.6 mpg
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4,000 lbs --- 19.8 mpg
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4,500 lbs --- 17.6 mpg
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5,000 lbs --- 15.9 mpg
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5,500 lbs --- 14.4 mpg
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6,000 lbs --- 13.2 mpg
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6,500 lbs --- 12.2 mpg
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7,000 to 8,500 lbs --- 11.3 mpg.
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IRC § 30B(b)(2)(C) states the term “vehicle inertia weight class” has the same meaning as when defined in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.).
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IRC § 30B(h)(4) Reduction In Basis
The basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed (determined without regard to IRC § 30B(g) Application With Other Credits).
IRC § 30B(h)(6) Property Used By Tax-Exempt Entity
In the case of a vehicle whose use is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such vehicle to the person or entity using such vehicle shall be treated as the taxpayer that placed such vehicle in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such vehicle (determined without regard to IRC § 30B(g) Application With Other Credits). For purposes of IRC § 30B(g) Application With Other Credits, property to which this paragraph applies shall be treated as of a character subject to an allowance for depreciation.
IRC § 30B(h)(7) Property Used Outside United States, Etc., Not Qualified
No credit shall be allowable with respect to any property referred to in section 50(b)(1) or with respect to the portion of the cost of any property taken into account under section 179.
IRC § 30B(h)(8) Recapture
The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable with respect to any property which ceases to be property eligible for such credit (including recapture in the case of a lease period of less than the economic life of a vehicle), except that no benefit shall be recaptured if such property ceases to be eligible for such credit by reason of conversion to a qualified plug-in electric drive motor vehicle.
IRC § 30B(h)(9) Election To Not Take Credit
No credit shall be allowed for any vehicle if the taxpayer elects to not have this section apply to such vehicle.