	Introduction1

Alternative fuel and advanced technology vehicles face significant barriers to wider acceptance as passenger and work vehicles. The Energy Policy Act of 2005 ( P.L. 109-58 ) expands these existing tax incentives and creates new ones. 179A) is available. Among other provisions, Sections 1341 and 1342 of the Energy Policy Act of 2005 contain several tax incentives for alternative fuel and advanced technology vehicles. For example, the act
replaces the existing clean-fuel vehicle tax deduction with a new tax credit for hybrid vehicles; creates a tax credit for the purchase of lean-burn passenger vehicles; creates a new tax credit for the purchase of fuel-cell vehicles; replaces the existing clean-fuel vehicle tax deduction with an alternative fuel vehicle tax credit; and replaces the existing deduction for the installation of refueling infrastructure with a tax credit.
Alternative fuel and advanced technology vehicles face significant market barriers, such as high purchase price and limited availability of refueling infrastructure. The Energy Policy Act of 2005 (P.L. 109-58) expands and establishes tax incentives that encourage the purchase of these vehicles and the development of infrastructure needed to support them. Among the new provisions are tax credits for the purchase of hybrid vehicles (replacing an existing tax deduction), tax credits for the purchase of advanced diesel vehicles (although it is unclear whether any current vehicles will qualify), and tax credits to expand refueling infrastructure. This report discusses current federal tax incentives for alternative fuel and advanced technology vehicles. It also outlines how the Energy Policy Act of 2005 changes those incentives. This report will be updated as events warrant.