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Federal & State Tax Credits??

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  • Federal & State Tax Credits??

    I first posted this in the Conversion section, but realized I'm new, so this might be a better spot.

    I'll admit that I'm late in joining the CNG craze here in Utah, but better late than never, I suppose. Last week I flew to Arizona because there was a GSA auction for some Bi-Fuel CNG F150's. I was blown away when a 2001 extended cab F150 with 30,000 miles on it sold for over $17,000. That seems crazy when I saw a similar model normal gasoline F150 sell for $4,500.

    So that got me on the thought of conversion. I know it's expensive, but I have been reading up on the subject. It looks like a conversion will run you about $10,000. I know there is a range, but that appears average. But I'm looking and in Utah there is the tax rebate up to $3000, but I'm also seeing that if you convert to dedicated CNG there is also a Federal rebate of up to $5000 for small cars. Does anyone know anything about that?

    I read something that says when you convert a late model "clean" car to dedicated CNG they'll potentially take half of the conversion cost (in this case, $10K) and apply a multiplier of 0.8. That would put the federal tax credit at $4K and the Utah credit at $3K (if I'm doing my math right). That would net out my out of pocket expense at $3K. If I drive my truck 15,000 miles this year, at maybe 20 MPG, that'd be 750 gallons. Saving (right now) about $3 per gallon, that saves me $2,250 this year alone.

    Someone please let me know if my math is off. I really want to pull the trigger, but want to make sure it makes sense too. I don't mind going to dedicated CNG because I'm in Salt Lake where there are stations and the only other place I'd drive it is Logan for family and there's a station there too. Thanks!

    I love this site, by the way!

  • #2
    Re: Federal & State Tax Credits??

    Welcome to CNGchat, Airliner!

    The Federal tax credit only applies to the taxpayer who put the dedicated (not bi-fuel) alternative fuel vehicle into service after December 31, 2005.

    OEM Vehicles (Federal Credit)
    So with a new Civic GX purchased today this means the person who bought it from the dealer gets the credit (some Honda dealers take the credit when selling to a tax exempt organization however).

    For a used natural gas vehicles there are no federal tax credits, seeing as how after December 31, 2005 there were simply no OEMs apart from Honda making them. One bizarre possible situation might be if a GM dealer had, for example, a 2005 dedicated CNG Silverado truck sitting on his lot as a demo vehicle, never been titled to a consumer until you came along. Better not count on finding something like this

    Converted Vehicles (Federal Credit)

    Again, the taxpayer who put the conversion into service after December 31, 2005 takes the credit.

    Utah State Credits
    Covers 1/2 the incremental cost of either the conversion or the OEM incremental cost for the CNG system, capped at $3,000 for OEM and $2,500 for conversions.

    Here is some required reading

    I will move this discussion over to the Incentives Forum.


    • #3
      Re: Federal & State Tax Credits??

      So on the Federal credit for the conversion, the person that pays for the conversion gets the credit ONLY if it's a dedicated CNG, right? Bi-Fuel doesn't count?

      Alright, I got my answer. It's only for dediated CNG. Bi-fuel is a no on that one. The shops in Utah aren't holding the certs on too many EPA-certified engine models though because it's too pricey.
      Last edited by Airliner; 05-19-2008, 04:40 PM. Reason: Did more research


      • #4
        Re: Federal & State Tax Credits??

        An example I have been thinking about: Chev/Gmc 2500 with GVW over 8500#.

        I have seen a NEW 2008 chev 2500 6.0l/auto trans./cloth seats/power windows on sale for $18000 This truck has 9200# gvw.

        Baytech says it will soon have kits certified for the 2009 chev 6.0 (2009's are supposed to have better valves in the engine than 2008's)

        If the conversion costs $10,000 (made up number) and qualifies for $8000 federal and $2500 state. It would make the conversion "better than free".

        There has to be something wrong with my logic. What am I missing?


        • #5
          Re: Federal & State Tax Credits??

          I think the problem is that in order to have that conversion done it's going to be a lot more than $8,000. I called a place today to find out about this issue. First off, the conversion has to be a dedicated CNG, not bi-fuel. Also, the guy today told me a regular conversion would run me about $8,000 for a light truck, but the EPA certified conversion would probably run me closer to $18,000. That's a light truck, so I'm not sure about your heavier one.


          • #6
            Re: Federal & State Tax Credits??

            Another thing to consider is that the Utah tax credit can be rolled over to the next year, and can continue to do so for up to five years.

            The federal tax credit cannot be rolled over into following years unless the vehicle is being purchased by your business...then it can go two years back and five years least this is my understanding.

            So in the case of converting a 3/4 ton Chevy for yourself, unless you expect to pay at least $8,000 in federal taxes, you do will not be able to take full advantage of the $8,000 tax credit.

            If I am wrong, please tell me.


            • #7
              Re: Federal & State Tax Credits??

              Is the Federal credit a flat $8000 or is it 50% upto $8000? Also, do 3/4 ton 6 liter trucks qualify for this credit? I thought that it had to be the 8.1 liter engine and had to be on larger truck like a Kodiak or something like that. I was quoted $25,000 to convert a Kodiak with 40gge tanks and would be a bi-fuel on CNG or Propane (which would be nice for never getting stuck).
              2000 Escalade (option 3 conversion) FOR SALE
              2004 F150 XLT (OEM conversion)
              2000 Camry (Awesome Car!!)