What Is the Alternative Fuels Tax Credit?

The alternative fuels credit is a 澳洲幸运5官方开奖结果体彩网:nonrefundable tax credit awarded to 澳洲幸运5官方开奖结果体彩网:taxpayers who use non-alcohol alternative fuels that are either sold commercially by the taxpayer or used in the taxpayer’s vehicles for business.

Understanding the Alternative Fuels Tax Credit

The alternative fuels credit, which is detailed in the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Code (IRC), came from the idea that the United States should reduce its dependence on imported oil and instead embrace 澳洲幸运5官方🥀开奖结果体彩网:advanced fuels and vehicle techno♔logies.

Particularly influential in the development of the IRC’s views on alternative fuels were the 澳洲幸运5官方开奖结果体彩网:American Jobs Creation Act of 2004 (Jobs❀ Bill); the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (Highway Bill) of 2005; and the Energy Policy Act of 2005. The 澳洲幸运5官方开奖结果体彩网:fuel credits for 澳洲幸运5官方开奖结果体彩网:biodiesel or renewable diesel credits, as well as fuel mixtures, including ethanol/gasoline blends, were established in the Volumetric Excise Tax Credit (VEETC) portion of the Jobs Bill. They are meant to provide incentives to produce, sell, and use these fuels.

The 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) considers alternative fuels to be liquefie♛d petroleum gas (LPG), compressed natural gas (CNG), liquefied natural gas (LNG), liquefied hydrogen, liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, liquid hydrocarbons derived from biomass, and P-Series fuels.✅

Note that 澳洲幸运5官方开奖结果体彩网:hydrocarbons include liquids that contain oxygen, hydrogen, and carbon, and that liquid hydrocarbons derived from biomass include ethanol, biodiesel, and renewable diesel. However, the IRS does not include these fuels in the alternative fuels category. 澳洲幸运5官方开奖结果体彩网:Tax incentives for these fuels are covered under the fuel categories of gasoline and diesel, respectively.

A $0.50 per gallon credit is available for natural gas, liquefied hydrogen, propane, P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and compressed or 澳洲幸运5官方开奖结果体彩网:liquefied gas derived from biomass. For propane and natural gas sold, the tax credit is based on the gasoline gallon equivalent (GGE) or diesel gallon equivalent (DGE).

Alternative Fuels Credit Availability

Among those that may be able to take advantage of the alternative fuels credit are fleet operators, fuel providers, and fuel blenders. To qualify for the 澳洲幸运5官方开奖结果体彩网:tax credit, fuel composition, the way the fuel is used, and the excise tax payment procedure must be clearly delineated. Providers and blenders must also register with the IRS. Forms 8849, 4136, 6478, or 8864 can be used to make a claim for alcohol, biodiesel, or renewable diesel, or an alternative fuel used to produce a mixture.

The Bottom Line

Taxpayers who use non-alcohol alternative fuels for business may be awarded the alternative fuels credit. It is a nonrefundable tax credit, meaning that it only reduces the amount of tax someone owes; it doesn't create a refund.