SB 40 Creates various tax incentives for certain energy uses
Sponsor: Ridgeway
LR Number: 0214L.06C Fiscal Note: 0214-06
Committee: Ways & Means
Last Action: 5/18/2007 - H Calendar S Bills for Third Reading Journal Page:
Title: HCS SS SB 40 Calendar Position:
Effective Date: August 28, 2007
House Handler: Ervin

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Current Bill Summary


SS/SB 40 - This act creates an income tax credit for the costs of constructing a qualified alternative fuel vehicle refueling property. The tax credit shall not exceed the lesser of twenty thousand dollars or twenty percent of the costs directly associated with the purchase and installation of any alternative fuel storage and dispensing equipment. The cumulative amount of credits which may be claimed shall not exceed three million dollars for taxable year 2008. For taxable year 2009, the cumulative amount of tax credits which may be claimed is reduced to two million dollars, and for taxable year 2010, the amount is further reduced to one million dollars. The tax credit is non-refundable, but may be carried forward for two subsequent tax years. The tax credit is fully transferable. The act contains a recapture provision for refueling properties which cease sales of alternative fuel. The provisions of the act creating the tax credit program will automatically expire six years from the effective date of the act if not re-authorized.

The act creates an income tax deduction for tax year 2008, for a taxpayer's purchase of qualified hybrid vehicles. The deduction will equal the lesser of one thousand five hundred dollars or ten percent of the purchase price of the vehicle. The tax deduction must be taken in the year in which the purchase is made.

The act creates a tax credit for the purchase of E-85 gasoline. The tax credit will be equal to: twenty five cents per gallon for 2008; twenty cents per gallon for 2009 and 2010; and fifteen cents per gallon for 2011 and each subsequent year. The tax credit must be for at least fifty dollars, but may not exceed five hundred dollars per taxpayer per year. The aggregate amount of tax credits which may be redeemed by all taxpayers in any given year shall not exceed five hundred thousand dollars. The tax credit is non-refundable, but may be carried forward three years. The provisions allowing for the tax credit for purchases E-85 gasoline will sunset six years from the effective date of the act unless re-authorized.

The act creates a new income tax credit equal to 25% of the cost to purchase and install E-85 conversion kits on motor vehicles. The credit is nonrefundable and fully transferable. The program for the tax credit is capped at $500,000 and expires in five years.

The act also creates a sales tax exemption for fiscal year 2008, for purchases of automobiles designed to operate on eighty-five percent ethanol fuel.

Under current law, in order for a manufacturer to receive an exemption from sales tax for electrical energy used in the primary manufacture of a product, the manufacturer must prove that the total cost of electricity used exceeds ten percent of the total cost of production or that the raw materials used in the primary manufacture of a product contain at least twenty-five percent recovered materials. This act creates a rebuttable presumption that the raw materials used in the primary manufacture of automobiles contain at least twenty-five percent recovered materials.

This act is similar to SS/SCS/HCS/HB 1092 (2006) and Senate Bill 842 (2006).

JASON ZAMKUS