Higher tax credits for alternative fuel vehicles in Obama budget

Higher tax credits for alternative fuel vehicles in Obama budget

The White House budget released last week calls for increasing the tax credit for electric vehicles from $7,500 to $10,000. Taxes on liquefied natural gas would be cut to encourage its use in motor vehicles. The tax cuts to help AFVs would cost $4.8 billion through 2024.

The proposal would remove the limit on the number of a manufacturers vehicles that can receive the tax credit. Any vehicles costing more than $45,000 (the Tesla Model S and Cadillac ELR) would continue to get the smaller tax credit.

The only car currently running on compressed natural gas is a version of the Honda Civic. Several medium- and heavy-duty trucks use CNG.

Under the budget proposal, dealers could offer a point-of-sale rebate rather than customers having to apply for a credit on their income taxes. The credit would be phased out by 2022.