GRASSLEY BILL OFFERS BUSINESSES SIGNIFICANT TAX BREAKS TO BUY FUEL-EFFICIENT ALTERNATIVE ENERGY VEHICLES
WASHINGTON - Sen. Chuck Grassley, chairman of the Committee on Finance, today introduced bipartisan legislation to significantly increase tax incentives for business owners who buy fuel-efficient alternative energy vehicles. The Grassley bill will make certain that businesses receive tax benefits for buying more efficient, cleaner alternative energy vehicles just as they now receive for the purchase of sport utility vehicles (SUVs). Grassley introduced the bill with Sen. Max Baucus, ranking member of the Committee on Finance.
If enacted, the proposed changes would be the biggest incentives for the business purchase of alternative energy vehicles ever to emerge from the Finance Committee and possibly alter the way businesses approach their vehicle purchases. The alternative energy vehicles include electric cars; hybrid cars that run on part-fuel, part-electricity; and vehicles that run entirely on alternative fuel such as compressed natural gas.
"The tax code shouldn't favor SUVs over alternative energy cars for business owners," Grassley said. "Some business owners will want to use SUVs and some will want to use hybrid cars. The choice should be theirs and the tax code should be consistent. The purchase of either kind of vehicle will help business growth, especially for small businesses, which create most of the nation's jobs."
The bill, the America's Business Choice (ABC) Act, exempts passenger vehicles eligible for the alternative motor vehicle credit and the credit for qualified electric vehicles from the limitation on depreciation for "luxury" automobiles.
Under current depreciation rules, a business owner who buys an SUV gets a deduction for the depreciation not subject to the limitation for "luxury" automobiles. The Grassley bill will provide the same depreciation deductions for business owners who buy alternative energy vehicles.
In addition, the Grassley bill allows small business owners to use the tax benefit of expensing of up to $100,000 for their alternative energy vehicles. Under current law, business owners have not been able to use expensing if they purchased a passenger vehicle that costs more than $10,585 (adjusted for inflation to $14,800 for 2005 purchases).