How to Make the Most of the New Alternative Fuels Infrastructure Tax Credit

The new Alternative Fuel Infrastructure Tax Credit is a scheme or program that helps businesses reduce their overall taxable income while adopting sustainable business practices. It is authorized and applicable for the installation of alternative refueling equipment.

The credit scheme was actually part of the Energy Policy Law of 2005, and since then it has been put into practice and revised several times.

The alternative fuels eligible for the tax credit are:

  • Liquefied petroleum gas
  • Natural gas
  • Diesel fuel blends – with at least 20% biodiesel
  • E85
  • Electricity
  • Hydrogen
  • Liquefied petroleum gas

What is the amount of the loan?

There are certain time frames for credit amounts depending on when the equipment was put into service according to the Department of Energy (DOE).

  • Before January 2009: The credit amount is 30% of the cost but is equal to or less than $ 30,000 according to the IRS.
  • During the year 2009: The credit amount is 50% but must not exceed $ 50,000.
  • For residential refueling equipment: The tax credit can go up to $ 1,000 and for equipment in service after 2008, it is $ 2,000.
  • For hydrogen refueling equipment: $ 200,000 max (after 2008) according to the IRS.

Which vehicles are eligible for the new alternative fuel infrastructure?

The amount of the tax credit depends on the gross weight of the vehicle. Also called GVWR, the tax credit can reach $ 50,000. This is a one-time arrangement for the purchase of a new vehicle or the conversion of an old vehicle into replacement fuel.

Now there are different tax credit brackets based on the GVWR. For example, on small vehicles weighing 6,000 pounds or less, the maximum credit you can get is $ 5,500. While for those weighing over 26,501 pounds or pounds. You can get up to $ 50,000.

In addition, certain conditions must be met to make the vehicle eligible for conversion. These are:

  • The equipment must be new.
  • It must meet all federal and state safety standards.
  • Only a qualified technician can install it.

Who is eligible for the new Alternative Fuels Infrastructure Tax Credit?

As we know, the new alternative fuel infrastructure tax credit involves the use of fuel from renewable sources.

The credit is based on the different types of fuel costs. In fact, the aim is to encourage companies to use and produce fuel from renewable sources rather than fossil fuels.

However, the tax credit is not available to individuals for the moment; it is above all to facilitate businesses, agriculture, breeding, boats, etc.

Eligibility criteria

The new alternative fuels infrastructure tax credit program includes different fuels. This even includes fuel used in boats (commercially) and warehouses for different types of machinery to be used.

The criterion is suitable for non-profit organizations as well as schools (for buses, etc.). Other industries included are:

  • Manufacturing companies
  • Agriculture
  • Landscape owners
  • Construction companies

So anyone who uses renewable fuels like biofuels to run any equipment in these businesses will be eligible for the credit.

How to check eligibility

Now you might be wondering if your business or organization matches the criteria?

It’s easy to find out. Just log into the IRS webpage and search for it. You can also speak to a tax professional or lawyer to verify your eligibility or any other concerns about your business.

How to register

The next step is how to apply for the program. You can simply apply through federal tax form 4136. This is the same form that tax filers can use to claim the new alternative fuel infrastructure tax credit.

Filers can claim the credit based on income tax for a particular tax year. The claim is usually made on tax returns with Form 4136, which will calculate the total credit you can claim.

You can claim the credit within three years of filing this return or within two years of paying the tax.

Benefits of the New Alternative Fuels Infrastructure Tax Credit

The program basically helps businesses while keeping the global benefits of renewable energy in the background. Here are some of the main benefits of the program:

  • The new tax credit for alternative fuel infrastructure offsets the taxable income of the business.
  • An opportunity to save and invest the money elsewhere or to integrate it into the capital of the company.
  • Businesses can take advantage of the tax benefit.

How the program works

As we have seen, the new Alternative Fuels Infrastructure Tax Credit reduces the tax imposed on fuels. This tax is generally used for the maintenance of highways, etc. This tax is applied to gasoline and diesel, and everyone who buys them must pay it.

The problem is with the use. Of course, not everyone uses fuel for taxable purposes. But since the tax paid will be refunded (dollar for dollar), many companies find it a great advantage to use fuel from renewable sources.

How to Maximize Your Benefits

If you want to maximize your earnings based on the pattern, you need to be aware of this. This is very important because over time the government makes certain amendments and changes to these programs, so make sure you know everything before you apply.

Then you have to be in the right industry. Your business must be on the list of those eligible for the benefit. In addition, it must have the required equipment that can be converted to alternative fuels.

However, if you are not using alternative fuel in your professional equipment or if your business does not fit the area of ​​the program, you may also qualify by selling the alternative fuel to others for use in boats, airplanes. , other vehicles, etc. In this case, too, you are entitled to the benefit.

Alternative fuels by definition include:

Now you can convert the equipment to maximize the earnings i.e. switch from diesel to propane to make your business eligible for credit.

Let’s take two examples here to reiterate the concept:


In a warehouse, you have basic machines like the forklift and cranes that are used to transport and store cartons or boxes. These need fuel – usually diesel – to operate.

Check if these can be replaced with propane. If possible, you will be eligible for the new Alternative Fuels Infrastructure Tax Credit.

Aviation industry

Although it is difficult to convert the entire aircraft engine to alternative fuel, you can work on some equipment on the ground.

In such a vast area, we have a lot of vehicles and ground equipment such as:

  • Tow tractors
  • Forklifts
  • GPU tractors
  • External AC tow vehicle
  • Generators etc.

While you cannot change aviation grade fuel, you can convert this ground equipment to biofuels. Since there are so many machines, you will be entitled to a lot of credit.

The more vehicles you convert, the more you earn. So you can also increase your fleet or just try to convert all relevant machines.

This would easily offset your taxes; in fact, it may even entitle you to a refund if it is more than your tax.

Incorrect claims

Now keep in mind that this may seem like a simplistic scheme for getting credit. However, anything that is wrong or misleading on your part may result in legal sanction.

Whether the result of human error or legitimate fraud, the complaint is considered abusive and a penalty is therefore imposed.

The new Alternative Fuel Infrastructure Tax Credit is by far one of the most misused tax credit plans out there, so be extra careful when filling it out.

To avoid jail and punishment, make sure you:

  • You always claim through a genuine and registered trading company.
  • Use the company account for such transactions.
  • Make sure all business activities are transparent.

Final thoughts

The new tax credit for alternative fuel infrastructure is a great initiative for business as well as for the environment.

However, it can be beneficial in the short term. As trends and technological advances evolve, the new criteria for the Alternative Fuels Infrastructure Tax Credit will also continue to evolve. So make the most of it while you can, while saving your planet!

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