Incentives

Clean Fuel Vehicle Incentives
(updated January, 2013)

The following is a summary of current State and Federal programs that help defray the cost of switching to alternative fuels:

State 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 July, 2009 ethanol and biodiesel blends up to 90% are taxed at gasoline and diesel rates, respectively.   All fuels are subject to annual indexing relative to the petroleum product 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
Clean Fuel Vehicle Fund. The finance Authority of Maine (FAME) 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.

Insurance Incentives. Insurers are allowed, but not required, to offer incentive rates to encourage policyholders to use clean fuel vehicles. Ask your insurance agent. Many vehicle manufacturers offer substantial incentives as well.

Federal Incentives

In addition to Maine State incentives, taxpayers can also take advantage of Federal tax incentives. The New Year’s Day “Fiscal Cliff” tax deal in Congress reinstated federal alternative fuel tax incentives and credits through December of 2013, and retroactively to January of 2012. It also extends tax credits for plug-in hybrid Electric Vehicles (EVs) up to $7,500. For more details, visit the Department of Energy Alternative Fuels and Advanced Vehicles Data Center.

Alternative Fuel Excise Tax Credit. This tax incentive is available for alternative fuel that is sold for use or used as a fuel to operate a motor vehicle. A tax credit in the amount of $0.50 per gallon is available for the following alternative fuels: compressed natural gas (based on 121 cubic feet), liquefied natural gas, liquefied petroleum gas (propane), P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, compressed or liquefied gas derived from biomass and hydrogen.

Alternative Fuel Infrastructure Tax Credit. Fueling equipment for natural gas, liquefied petroleum gas (propane), electricity, E85, hydrogen, or diesel fuel blends containing a minimum of 20% biodiesel is eligible for a tax credit of 30% of the cost, not to exceed $30,000. Fueling station owners who install qualified equipment at multiple sites are allowed to use the credit towards each location. Consumers who purchased qualified residential fueling equipment prior to December 31, 2013, may receive a tax credit of up to $1,000.

Biodiesel Mixture Excise Tax Credit. A biodiesel blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive in the amount of $1.00 per gallon of pure biodiesel, agri-biodiesel, or renewable diesel blended with petroleum diesel to produce a mixture containing at least 0.1% diesel fuel.

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