Tax Rebates for Alternative Fuel and Diesel-Powered Vehicles
The Alternative Fuel Motor Vehicle Credit was enacted by the Energy Policy Act of 2005 and includes separate credits for four distinct categories of vehicles:
- Qualified Hybrid Vehicles,
- Qualified Fuel Cell Vehicles,
- Qualified Alternative Fuel Motor Vehicles (QAFMV) and Heavy Hybrids, and
- Advanced Lean-Burn Technology Vehicles.
The amount of the potential credit varies by type of vehicle. If you purchase a qualifying diesel using advanced lean-burn technology or dedicated alternative fuel vehicle, you may be eligible for a federal income tax credit of up to $1,800 for diesels, or $4,000 for alternative fuel vehicles. (See List of Vehicles Below)
The following requirements must be met to claim the credit for Diesel and AFV vehicles:
- The original use of the vehicle commences with the taxpayer.
- The vehicle is acquired for use or lease by the taxpayer, and not for resale. (The credit is only available to the original purchaser of a new, qualifying vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.)
- The vehicle is used mostly in the United States.
- The vehicle must be placed in service by the taxpayer after December 31, 2005 and must be purchased on or before December 31, 2010.
Tax Credits for Diesel Vehicles
The following summarizes the tax credits for qualifying diesel vehicles purchased or placed into service after December 31, 2005. These are the only makes and models that are eligible for a federal income tax credit.
- Mercedes GL 320 Bluetec: $1,800
- Mercedes ML 320 Bluetec: $900
- Mercedes R 320 Bluetec: $1,550
- Volkswagen Jetta 2.0L TDI sedan: $1,300
- Volkswagen Jetta 2.0L TDI SportWagen: $1,300
Tax Credits for Alternative Fuel Vehicles
Qualifying vehicles purchased on or after January 1, 2006, will be eligible for a tax credit ranging from $400 to $4,000 based on fuel economy. The alternative motor vehicle tax credit is actually a combination of two separate tax credits.
- Mercedes GL 320 Bluetec: $1,800
- Mercedes ML 320 Bluetec: $900
- Mercedes R 320 Bluetec: $1,550
- 2009 Ford Escape Hybrid 2WD: $3,000
- 2009 Ford Escape Hybrid 4WD: $1,950
- 2009 Mercury Mariner Hybrid 2WD: $3,000
- 2009 Mercury Mariner Hybrid 4WD: $1,950
- 2009 Volkswagen Jetta 2.0L TDI sedan: $1,300
- 2009 Volkswagen Jetta 2.0L TDI SportWagen: $1,300
- 2008 Chevrolet Malibu Hybrid: $1,300
- 2008 Chevrolet Tahoe Hybrid (2WD and 4WD): $2,200
- 2008 Ford Escape 2WD Hybrid: $3,000
- 2008 Ford Escape 4WD Hybrid: $2,200
- 2008 GMC Yukon Hybrid (2WD and 4WD): $2,200
- 2008 Honda Civic GX compressed natural gas vehicle: $4,000
- 2008 Honda Civic Hybrid CVT: $2,100
- 2008 Lexus LS 600h L Hybrid: $450
- 2008 Lexus RX 400h 2WD and 4WD: $550
- 2008 Mazda Tribute 2WD Hybrid: $3,000
- 2008 Mazda Tribute 4WD Hybrid: $2,200
- 2008 Mercury Mariner 2WD Hybrid: $3,000
- 2008 Mercury Mariner 4WD Hybrid: $2,200
- 2008 Nissan Altima Hybrid: $2,350
- 2008 Saturn Aura Hybrid: $1,300
- 2008 Saturn Vue Green Line: $1,550
- 2008 Toyota Camry Hybrid: $650
- 2008 Toyota Highlander Hybrid 4WD: $650
- 2008 Toyota Prius: $787.50
Additional Information
The complete list of eligible vehicles is available at FuelEconomy.gov.
Some state and local governments also provide incentives for hybrids. Check with your state or local government or view the U.S. Department of Energy's list of State & Federal Incentives & Laws. Another good source for identifying these is the Database of State Incentives for Renewables and Efficiency.