U.S. Legislative Updates

The tax provisions of fiscal cliff agreement reached on New Year’s Day included several alternative fuel tax provisions. The  American Taxpayer Relief Act extends the $1-per-gallon biodiesel tax incentive and the .50-cent-per gallon or gallon equivalent tax credit for CNG, LNG, and propane through the end of this year and retroactive to January 1, 2012. Details on how to apply for the tax credit on fuels used in 2012 are expected to be published by the Internal Revenue Service by the end of the month. State and local governments, as well as non-profit organizations, will be able to apply for a direct refund of the credit of CNG, LNG, and propane.

The agreement also extends the individual income tax credit for highway-capable plug-in motorcycles and 3-wheeled vehicles for two years, through 2013 and retroactive for 2012; and extends the 30 percent investment tax credit for alternative vehicle refueling infrastructure through 2013 and retroactive for 2012.

The American Taxpayer Relief Act extends bonus deprecation for certain assets. Under current law, businesses are allowed to recover the cost of capital expenditures over time according to a depreciation schedule. For 2008 through 2010, Congress allowed businesses to take an additional depreciation deduction allowance equal to fifty percent of the cost of the depreciable property. This was expanded to allow 100 percent bonus depreciation for investments placed in service after September 8, 2010 and before 2012 and fifty percent bonus depreciation for investments placed in service during 2012. The American Taxpayer Relief Act would extend the current fifty percent expensing provision for qualifying property purchased and placed in service before January 1, 2014 (before January 1, 2015 for certain longer-lived and transportation assets) and also allow taxpayers to elect to accelerate some AMT credits in lieu of bonus depreciation. 

Note: The bonus depreciation allowed for passenger automobile is capped at an additional $8,000 in the year the vehicle is first placed in service.

The American Taxpayer Relief Act would extend through 2013 the increase in the monthly exclusion for employer-provided transit and vanpool benefits from $125 to $240, so that it would be the same as the exclusion for employer-provided parking benefits. The two benefits have now been set at equal levels once again for 2012 (retroactively) and 2013.