Clean Fuel Vehicle Incentives
(updated July, 2014)
The following is a summary of current State and Federal programs that help defray the cost of switching to alternative fuels:
Maine State Tax Incentives
The State of Maine has enacted legislation that provides incentives for the purchase and operation of Clean Fuel Vehicles. Businesses, municipalities, and individuals can now save money when adding clean, alternative fuel vehicles to their fleet.
Fuel Tax Equalization for Clean Fuels in Maine
Beginning October 1, 2000, the State Highway tax on clean fuels was equalized to gasoline according to their relative energy (BTU) content by volume. In 2008, adjustments were made and some fuels were added. Beginning in July 2009, ethanol and biodiesel blends up to 90% are taxed at gasoline and diesel rates, respectively. All fuels have been indexed relative to the tax on the petroleum product that they displace.
|Fuel Type||BTU content per gallon||Formula (BTU value fuel/BTU value gasoline)||Tax Rate|
|Gasoline||115,000||100% x $0.30||$0.300 per gallon|
|Methanol (M85)||65,530||57% x $0.30||$0.147 per gallon|
|Ethanol (E85)||81,850||71% x $0.30||$0.198 per gallon|
|Propane (LPG)||84,500||73% x $0.30||$0.219 per gallon|
|Compressed Natural Gas (CNG)||93,150*||81% x $0.30||$0.243 per 100 SCF*|
|Hydrogen||26,450||23% x $0.30||$0.070 per 100 SCF*|
|HCNG***||79,733*||69% x $0.30||$0.208 per SCF*|
|Diesel||128,400||100% x $0.312||$0.312 per gallon|
|Natural Gas (LNG)***||73,500||57% x $0.312||$0.178 per gallon|
|BioDiesel (B100)||118,300||92% x $0.312||$0.287 per gallon|
|*Based on 100 standard cubic feet (SCF)
** Hydrogen Compressed Natural Gas *** Liquefied Natural Gas
Biofuels Production Tax Credit
A certified commercial biofuel producer is eligible for an income tax credit of $0.05 per gasoline gallon equivalent of biofuel produced for use in motor vehicles or otherwise used as a substitute for liquid fuels. Biofuel is defined as ethanol, biodiesel, hydrogen, methanol, or any other transportation fuel derived from agricultural crops or residues, or from forest products or byproducts. A taxpayer claiming this credit must receive a letter from the Maine Department of Environmental Protection that certifies the biofuels produced during the taxable year are eligible for the tax credit. For biofuels blended with petroleum or other non-biofuels, the credit is allowed only on the biofuels portion of that blend. Any portion of unused credits may be carried over for up to 10 taxable years.
Maine Clean Fuel Vehicle Fund
The Finance Authority of Maine manages this non-lapsing revolving loan fund, which may be used for direct loans and grants to support production, distribution and consumption of clean fuels and biofuels. Contact Charlie Emmons at FAME at 207-620-3510.
Auto Insurance Incentives
Insurers are allowed, but not required, to offer incentive rates to encourage policyholders to use clean fuel vehicles. Ask your agent. Many vehicle manufacturers offer incentives as well.
Biodiesel Fuel Tax Exemption
An individual that produces biodiesel for personal use or use by a member of his or her immediate family is exempt from the state fuel excise tax.
Federal Loans and Tax Incentives
In addition to Maine State incentives, taxpayers can also take advantage of Federal loan and tax incentives. For more details, visit the Department of Energy Alternative Fuels and Advanced Vehicles Data Center at www.afdc.energy.gov, incentives and laws.
Improved Energy Technology Loans
The U.S. Department of Energy (DOE) provides loan guarantees through the Loan Guarantee Program to eligible projects that reduce air pollution and greenhouse gases, and support early commercial use of advanced technologies, including biofuels and alternative fuel vehicles. The program is not intended for research and development projects. DOE may issue loan guarantees for up to 100% of the amount of the loan for an eligible project. For loan guarantees of over 80%, the loan must be issued and funded by the Treasury Department’s Federal Financing Bank. For more information, see the Loan Guarantee Program website.
Plug-In Hybrid and Electric Vehicle Tax Credits
Plug-In Hybrid electric vehicles (PHEVs) and Electric Vehicles (EVs) purchased in or after 2010 may be eligible for a federal income tax credit from between $2,500 and up to $7,500. The credit amount will vary based on the capacity of the battery used to fuel the vehicle.
Idle Reduction Equipment Incentive
Qualified on-board idle reduction devise and advanced insulation are exempt from the federal excise tax imposed on the retail sale of heavy-duty highway trucks and trailers. The exemption also applies to the installation of qualified equipment on vehicles after the vehicles have been placed into service. For a list of eligible products and additional information about product exemption eligibility criteria, see the US Environmental Protection Agency’s (EPA) SmartWay Technology Program Federal Excise Tax Exemption website. For more information contact the U.S. IRS at (202) 622-3130 or go to http://www.irs.gov/