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Lots of tax goodies for LPG vehicles

April 1, 2002 By    

Going through the annual pains of writing your check to the IRS? Look forward and cheer up. It might not be so bad for propane users in the future. The Senate Finance Committee approved for Senate consideration the Energy Tax Incentives Act of 2002, which extends and creates a series of tax breaks for using propane as automotive fuel and for building energy efficient homes and appliances.

The legislation give a tax credit for buying a hybrid vehicle – and even more credit if the auto exceeds fuel efficiency or emissions guidelines. Buyers could even carry credits forward for 20 years, though they couldn’t claim more than the difference between their regular tax and minimum tax.

The size of the credit would vary from $250 to $14,000 depending on vehicle weight and power. Buyers could claim an additional credit ranging from $500 to $10,000 for fuel efficient vehicles. The credits shrink each year starting in 2003 and end after 2006.

The credits get even sweeter for vehicles that run exclusively on LPG. Taxpayers could get a base credit equal to 40 percent of the additional cost of the vehicle, plus another 30 percent credit for those meeting higher emissions standards. Buyers would have to base the credit on the difference between the manufacturer’s suggested retail price of the vehicle and the suggested price of similar gasoline-powered ones. There is a credit ceiling of $28,000 per vehicle.

Buyers choosing a mixed-fuel auto weighing at least seven tons, could get another partial break. If the auto runs on 75 percent LPG, buyers could get 70 percent of the alternate vehicle credit. If the auto ran on a blend of 90 percent LPG, the consumer could get a 90 percent credit.

Propane is in line for other automotive tax breaks as well. The bill would extend the break for clean-fuel vehicle refueling property two years to 2006. The bill would slow down the phase out, allowing a deduction of 75 percent for 2003 and 2004, 50 percent in 2005 and 25 percent in 2006.

The bill also would create a new 50 percent credit for installing LPG fueling equipment – up to $30,000 for a business or $1,000 for a residence. Taxpayers may carry credits forward for up to 20 years but the stations must be in use before 2007.

The tax breaks wouldn’t end after people buy their cars, trucks and buses and install refueling stations. Users of LPG fuel could claim a credit of 30 cents per gasoline gallon equivalent this year and next, 40 cents in 2004 and 50 cents in future years.

Additionally, home builders could get a credit between $1,250 and $2,000 if they build homes with projected annual heating and cooling costs between 30 and 50 percent less than those called for in the International Energy Conservation Code.

Homeowners could get a one-time 10 percent nonrefundable credit of up to $300 through 2005 for making energy efficiency improvements.

Owners of business property could also get a deduction of up to $2.25 per square foot for expenditures that reduce energy use.

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