Hydrogen fuel-cell vehicle tax credit expires this month: Will it be renewed?

Financial and other incentives are widely viewed as a good way to kickstart the adoption of new green vehicles, largely to compensate for their higher prices against conventional gasoline cars.

But just as Toyota is building up to next fall’s launch of its 2016 Mirai hydrogen fuel-cell vehicle in the U.S. market, a key tax incentive will expire at the end of this month–unless it’s renewed by Congress.

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The purchase of a plug-in electric car provides a Federal income-tax credit of $2,500 to $7,500 for the owner, depending on battery-pack size.

But the credits for hydrogen fuel-cell vehicles can be more generous yet–and are considerably more complicated.

The base income-tax credit for a light-duty fuel-cell vehicle is $4,000.

But an additional $1,000 to $4,000 credit is available to the extent a fuel cell vehicle’s fuel economy exceeds 2002 base fuel economy, based on the weight of the vehicle up to 8,500 pounds.

And in past years, credit amounts have been higher than that. Details can be found on the Qualified Fuel Cell Vehicles page of the IRS website.

That Federal income-tax credit expires on December 31, 2014–four weeks from today–and its renewal appears to be a very open question at this point.

With only a few days left in the current lame-duck Congressional session, and major issues (like funding the government and for how long) as yet unresolved, the fundamental challenge is getting a so-called “extender package” passed.

To do that, the Senate’s desire for a two-year package produced by its Finance Committee must be reconciled with the House’s desire to make selected tax and legislative changes permanent.

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Meanwhile, President Barack Obama’s immigration initiative is expected to eat up a lot of time.

The Senate Finance Committee’s draft legislative bill for an extender package included a provision that extends the hydrogen fuel-cell vehicle income-tax credit.

That committee is expected to be chaired by Senator Orrin Hatch [R-UT] in the next Congress; its outgoing chair is Senator Ron Wyden [D-OR].

Whether an extender package can be passed by the outgoing Congress, or early in the next session by the new Congress, remains very much an open question, according to D.C. insiders we spoke to.

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“If they don’t [pass such a package],” said one source, “who knows what will happen in 2015?”

Meanwhile, the Federal income-tax credits for purchase of plug-in electric cars do not have an expiration date. Instead, they are capped by volume for each automaker.

“The credit begins to phase out for a manufacturer’s vehicles when at least 200,000 qualifying vehicles have been sold for use in the United States,” says the IRS website, “determined on a cumulative basis for sales after December 31, 2009.”

This story originally appeared on Green Car Reports. Copyright 2014

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