Bipartisan Bill Increases Tax Incentives for Alternative Energy Vehicles
Businesses would receive tax benefits for buying more efficient, cleaner alternative energy vehicles like it currently does for SUVs.
Compiled by staff
Published: Mar 3, 2006
A bipartisan bill provides businesses tax benefits for buying fuel-efficient alternative energy vehicles, just as businesses now receive for the purchase of sport utility vehicles.
America's Business Choice (ABC) Act, introduced by Senate Finance Committee Chairman Chuck Grassley and his democrat ranking member Max Baucus, includes energy vehicles such as electric cards, hybrid cars that run on part-fuel, part-electricity; and vehicles that run entirely on alternative fuel such as compressed natural gas.
"The tax code shouldn't favor SUVs over alternative energy cars for business owners," Grassley says. "Some business owners will want to use SUVs and some will want to use hybrid cars. The choice should be theirs and the tax code should be consistent. The purchase of either kind of vehicle will help business growth, especially for small businesses, which create most of the nation's jobs."
The bill exempts passenger vehicles eligible for the alternative motor vehicle credit and the credit for qualified electric vehicles from the limitation on depreciation for "luxury" automobiles.
Under current depreciation rules, a business owner who buys an SUV gets a deduction for the depreciation not subject to the limitation for "luxury" automobiles. This bill will provide the same depreciation deductions for business owners who buy alternative energy vehicles.
In addition, the bill allows small business owners to use the tax benefit of expensing of up to $100,000 for their alternative energy vehicles. Under current law, business owners have not been able to use expensing if they purchased a passenger vehicle that costs more than $10,585 (adjusted for inflation to $14,800 for 2005 purchases).
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