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Tax Exemptions and Rebates for Vehicles Using Natural Gas as Fuel

Posted Friday, November 15th, 2013

Effective January 1, 2014, House Bill 579 repeals the alternative fuel decal program.  Compressed and liquefied natural gas used as transportation fuel will be exempt from both the fuel and sales taxes for a period of five years.  In January 2019, natural gas used as transportation fuel will begin being taxed and administered similar to diesel fuel, but at the reduced rate of $0.21 per gallon.
This legislation also created the Natural Gas Fuel Fleet Vehicle Rebate Program, which will provide $6 million dollars in rebates on a first-come, first-served basis per state fiscal year for qualifying new or converted natural gas vehicles.  The law allocates sixty percent, or $3.6M to private fleets; and forty percent, or $2.4M to government fleets.  Each applicant is eligible to receive up to fifty percent of eligible costs, not to exceed $25,000 per vehicle or a total of $250,000 per applicant per fiscal year.  The Department of Agriculture and Consumer Services is currently in the process of developing regulations to administer this program.  The proposed rule provides the Department will begin accepting applications on January 7, 2014. This rebate program is set expire on June 30, 2018.

For more information, please contact French Brown.

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