Qualified hybrid motor vehicle credits

(a)

Qualified hybrid motor vehicle purchasers credit

(1)

In general

Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to other credits) is amended by adding at the end the following:

30B.

Qualified hybrid motor vehicle purchasers credit

(a)

Allowance of credit

There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 65 percent of the sum of the credit amounts determined under subsection (b) with respect each qualified hybrid motor vehicle placed in service by the taxpayer during the taxable year. (b)

Credit amount

For purposes of subsection (a)— (1)

Fuel economy

The credit amount determined under this paragraph shall be determined in accordance with the following table: In the case of a vehicle which achieves a fuel economy (expressed as a percentage of the 2002 modelThe credit year city fuel economy) of— amount is—At least 125 percent but less than 150 percent$400At least 150 percent but less than 175 percent$800At least 175 percent but less than 200 percent$1,200At least 200 percent but less than 225 percent$1,600At least 225 percent but less than 250 percent$2,000At least 250 percent$2,400.

(2)

Conservation credit

The amount determined under paragraph (1) with respect to any vehicle shall be increased in accordance with the following table: In the case of a vehicle which achieves a lifetime fuel savings (expressed inThe credit amount gallons of gasoline) of—shall be increased by—At least 1,200 but less than 1,800$250At least 1,800 but less than 2,400$500At least 2,400 but less than 3,000$750At least 3,000$1,000.

(c)

New qualified hybrid motor vehicle

For purposes of this section— (1)

In general

The term new qualified hybrid motor vehicle means a motor vehicle— (A)which draws propulsion energy from onboard sources of stored energy which are both— (i)an internal combustion or heat engine using consumable fuel, and (ii)a rechargeable energy storage system, (B)which has received a certificate of conformity under the Clean Air Act and meets or exceeds the equivalent qualifying California low emission vehicle standard under section 243(e)(2) of the Clean Air Act for that make and model year, and— (i)in the case of a vehicle having a gross vehicle weight rating of 6,000 pounds or less, the Bin 5 Tier II emission standard established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle, and (ii)in the case of any other vehicle, the Bin 8 Tier II emission standard which is so established, (C)which is a passenger automobile or light truck with a gross vehicle weight rating of not more than 8,500 pounds, (D)which has a maximum available power of at least 4 percent, (E)the original use of which commences with the taxpayer, (F)which is acquired for use or lease by the taxpayer and not for resale, and (G)which is made by a manufacturer. (2)

Consumable fuel

For purposes of paragraph (1)(A)(i), the term consumable fuel means any solid, liquid, or gaseous matter which releases energy when consumed by an auxiliary power unit. (3)

Maximum available power

The term maximum available power means the maximum power available from the rechargeable energy storage system, during a standard 10 second pulse power or equivalent test, divided by such maximum power and the SAE net power of the heat engine. (d)

Limitation based on amount of tax

The credit allowed under subsection (a) for the taxable year shall not exceed the excess of— (1)the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over (2)the sum of the credits allowable under subpart A and sections 27 and 30 for the taxable year. (e)

Other definitions and special rules

For purposes of this section— (1)

Motor vehicle

The term motor vehicle has the meaning given such term by section 30(c)(2). (2)

Other terms

The terms automobile, passenger automobile, light truck, and manufacturer have the meanings given such terms in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.). (3)

2002 model year city fuel economy

(A)

In general

The 2002 model year city fuel economy with respect to a vehicle shall be determined in accordance with the following tables: (i)In the case of a passenger automobile: If vehicle inertiaThe 2002 model year weight class is: city fuel economy is:1,500 or 1,750 lbs45.2 mpg2,000 lbs39.6 mpg2,250 lbs35.2 mpg2,500 lbs31.7 mpg2,750 lbs28.8 mpg3,000 lbs26.4 mpg3,500 lbs22.6 mpg4,000 lbs19.8 mpg4,500 lbs17.6 mpg5,000 lbs15.9 mpg5,500 lbs14.4 mpg6,000 lbs13.2 mpg6,500 lbs12.2 mpg7,000 to 8,500 lbs11.3 mpg.

(ii)In the case of a light truck: If vehicle inertia The 2002 model year weight class is:city fuel economy is:1,500 or 1,750 lbs39.4 mpg2,000 lbs35.2 mpg2,250 lbs31.8 mpg2,500 lbs29.0 mpg2,750 lbs26.8 mpg3,000 lbs24.9 mpg3,500 lbs21.8 mpg4,000 lbs19.4 mpg4,500 lbs17.6 mpg5,000 lbs16.1 mpg5,500 lbs14.8 mpg6,000 lbs13.7 mpg6,500 lbs12.8 mpg7,000 to 8,500 lbs12.1 mpg.

(B)

Vehicle inertia weight class

For purposes of subparagraph (A), the term vehicle inertia weight class has the same meaning as when defined in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.). (4)

Fuel economy

Fuel economy with respect to any vehicle shall be measured under rules similar to the rules under section 4064(c). (5)

Reduction in basis

For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this paragraph) result from such expenditure shall be reduced by the amount of the credit so allowed. (6)

No double benefit

The amount of any deduction or credit allowable under this chapter (other than the credits allowable under this section and section 30) shall be reduced by the amount of credit allowed under subsection (a) for such vehicle for the taxable year. (7)

Recapture

The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit (including recapture in the case of a lease period of less than the economic life of a vehicle). (8)

Property used outside United States, etc., not qualified

No credit shall be allowed under subsection (a) with respect to any property referred to in section 50(b) or with respect to the portion of the cost of any property taken into account under section 179. (9)

Election not to take credit

No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle. (10)

Business carryovers allowed

If the credit allowable under subsection (a) for a taxable year exceeds the limitation under subsection (d) for such taxable year, such excess (to the extent of the credit allowable with respect to property subject to the allowance for depreciation) shall be allowed as a credit carryback and carryforward under rules similar to the rules of section 39. (11)

Interaction with motor vehicle safety standards

Unless otherwise provided in this section, a motor vehicle shall not be considered eligible for a credit under this section unless such vehicle is in compliance with the motor vehicle safety provisions of sections 30101 through 30169 of title 49, United States Code. (f)

Regulations

(1)

In general

The Secretary shall promulgate such regulations as necessary to carry out the provisions of this section. (2)

Determination of motor vehicle eligibility

The Secretary, after coordination with the Secretary of Transportation and the Administrator of the Environmental Protection Agency, shall prescribe such regulations as necessary to determine whether a motor vehicle meets the requirements to be eligible for a credit under this section. (g)

Termination

This section shall not apply to any property placed in service after December 31, 2009.

(2)

Conforming amendments

(A)Section 30(d) of such Code (relating to special rules) is amended by adding at the end the following new paragraph:

(5)

No double benefit

No credit shall be allowed under this section for any motor vehicle for which a credit is also allowed under section 30B.

(B)Section 1016(a) of such Code is amended by striking and at the end of paragraph (30), by striking the period at the end of paragraph (31) and inserting , and, and by adding at the end the following:

(32)to the extent provided in section 30B(e)(7).

(C)Section 6501(m) of such Code is amended by inserting 30B(e)(9), after 30(d)(4),. (D)The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 30A the following:

Sec. 30B. Qualified hybrid motor vehicle purchasers credit

(3)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date. (4)

Sticker information required at retail sale

(A)

In general

The Secretary of the Treasury shall issue regulations under which each qualified vehicle sold at retail shall display a notice— (i)that such vehicle is a qualified vehicle, and (ii)that the buyer may not benefit from the credit allowed under section 30B of the Internal Revenue Code of 1986 if such buyer has insufficient tax liability. (B)

Qualified vehicle

For purposes of paragraph (1), the term qualified vehicle means a vehicle with respect to which a credit is allowed under section 30B of the Internal Revenue Code of 1986. (b)

Qualified hybrid motor vehicle manufacturers credit

(1)

In general

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by adding at the end the following new section:

45J.

Qualified hybrid motor vehicle manufacturers credit

(a)

In general

For purposes of section 38, the qualified hybrid motor vehicle manufacturers credit determined under this section is 35 percent of the sum of the credit amounts determined under section 30B(b) with respect to each qualified hybrid motor vehicle produced by the taxpayer. (b)

Definitions

For purposes of this section, any term used in this section which is also used in section 30B shall have the meaning given such term by section 30B.

(2)

Credit treated as business credit

Section 38(b) of such Code is amended by striking plus at the end of paragraph (18), by striking the period at the end of paragraph (19) and inserting , plus, and by adding at the end the following new paragraph:

(20)the qualified hybrid motor vehicle manufacturers credit determined under section 45J(a).

(3)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

Sec. 45J. Qualified hybrid motor vehicle manufacturers credit

(4)

Effective date

The amendments made by this section shall apply to property produced after the date of the enactment of this Act, in taxable years ending after such date.