Utah State Legislature recently passed two house bills — H.B.406 and H.B.15 — that offer significant incentives to fleet operators and state motorists to switch to natural gas fuel. Initiator and Utah State Rep. Stephen G. Handy sought through this legislation to increase the uptake of alternative fuel vehicles and reduce the impact of high emission vehicles on the State’s air.
H.B. 406 – Tax credit related to natural gas heavy duty vehicles
H.B.406, effective 12 May 2015, provides an income tax credit for the purchase of a natural gas heavy duty vehicle. A qualifying vehicle is a commercial category 7 or 8 vehicle (according to vehicle classifications established by the U.S. Federal Highway Administration) operating with compressed natural gas (CNG) or liquified natural gas (LNG), which has never been titled or registered and has been driven less than 7,500 miles.
For a taxable year beginning on or after January 1, 2015, a qualified taxpayer may claim a tax credit against tax otherwise due:
(a) in an amount equal to:
- $25,000, if the qualified purchase occurs during calendar year 2015, calendar year 2016, or calendar year 2017;
- $20,000, if the qualified purchase occurs during calendar year 2018;
- $18,000, if the qualified purchase occurs during calendar year 2019; and
- $15,000, if the qualified purchase occurs during calendar year 2020; and
(b) if the taxpayer certifies under oath that over 50% of the miles that the heavy duty vehicle that is the subject of the qualified purchase will travel annually will be within the state.
Various limitations and exemptions apply that can affect the amount of funding available and qualifying conditions, but in general the Board shall reserve 25% of all tax credits available under this section for taxpayers with a small fleet, defined as 40 or fewer heavy duty vehicles registered in the state and owned by a single taxpayer.
H.B.15 – Clean Fuel Amendments and Rebates
H.B.15, effective 12 May 2015, creates the Conversion to Alternative Fuel Grant Program and extends tax credits for energy efficient vehicles. It authorizes the Department of Environmental Quality to make grants from the Clean Fuels and Vehicle Technology Fund.
The department may make a loan or a grant with money available in the fund:
(i) for the conversion of a private sector business vehicle or a government vehicle to use a clean fuel, if certified by the Air Quality Board; or
(ii) for the purchase of an OEM vehicle for use as a private sector business vehicle or government vehicle; or
(iii) to a person who installs conversion equipment on an eligible vehicle.
The amount of a loan for any vehicle may not exceed:
(i) the actual cost of the vehicle conversion;
(ii) the incremental cost of purchasing the OEM vehicle; or
(iii) the cost of purchasing the OEM vehicle if there is no documented incremental cost.
The amount of a grant for any vehicle may not exceed:
(i) 50% of the actual cost of the vehicle conversion minus the amount of any tax credit claimed for the vehicle for which a grant is requested (up to maximum $2,500 for the cost of the conversion system); or
(ii) 50% of the incremental cost of purchasing an OEM vehicle minus the amount of any tax credit claimed for the vehicle for which a grant is requested (maximum tax credit of $1,500 per motor vehicle applies).