Increase and extension of credit for certain flexible fuel hybrid vehicles

(a)

In general

Subsection (a) of section 30B of the Internal Revenue Code of 1986 is amended by striking and at the end of paragraph (3), by striking paragraph (4), and by inserting after paragraph (3) the following new paragraphs:

(4)the new flexible fuel hybrid motor vehicle credit determined under subsection (e), and (5)the new qualified alternative fuel motor vehicle credit determined under subsection (f).

(b)

New flexible fuel hybrid motor vehicle credit

Section 30B of such Code is amended by redesignating subsections (e) through (j) as subsections (f) through (k), respectively, and by inserting after subsection (d) the following new subsection:

(e)

New flexible fuel hybrid motor vehicle credit

(1)

In general

For purposes of subsection (a), the new flexible fuel hybrid motor vehicle credit determined under this subsection for the taxable year is the credit amount determined under paragraph (2) with respect to a new hybrid flexible fuel motor vehicle placed in service by the taxpayer during the taxable year. (2)

Credit amount

(A)

In general

The credit amount determined under this paragraph shall be determined in accordance with the following table: In the case of a vehicle the city fuel economy of which (expressed as a percentage of the city fuel economy ofthe comparable vehicle referred to in paragraph (3)(B)) is—The credit amount is—At least 125 percent but less than 150 percent$1,500At least 150 percent but less than 175 percent$2,000At least 175 percent but less than 200 percent$2,500At least 200 percent but less than 225 percent$3,000At least 225 percent$3,500.

(B)

Fuel economy

For purposes of subparagraph (A), the city fuel economy of the vehicle for which the credit is being determined shall be determined on a E–85 ethanol gallon equivalent basis (as determined by the Administrator of the Environmental Protection Agency), and the city fuel economy of the comparable vehicle referred to in paragraph (3)(B) shall be determined on a gasoline gallon equivalent basis (as so determined). (3)

New flexible fuel hybrid motor vehicle

For purposes of this subsection, the term new flexible fuel hybrid motor vehicle means a new qualified hybrid motor vehicle— (A)which is capable of operating on an alternative fuel, on gasoline, and on any blend thereof, and (B)which is certified by the Administrator of the Environmental Protection Agency, in consultation with the manufacturer, to have achieved a city fuel economy using E–85 ethanol which is at least 125 percent of the city fuel economy of a comparable vehicle that is a nonhybrid internal combustion vehicle fueled by gasoline. (4)

Coordination with new qualified hybrid motor vehicle credit

Subsection (d) shall not apply to any motor vehicle for which credit is allowed under this subsection. (5)

Limitation on number of eligible vehicles

(A)

In general

In the case of a new flexible fuel hybrid motor vehicle sold during the phaseout period, only the applicable percentage of the credit otherwise allowable by reason of paragraph (1) shall be allowed. (B)

Phaseout period

For purposes of this paragraph, the phaseout period is the period beginning with the second calendar quarter following the calendar quarter which includes the first date on which the number of new flexible fuel hybrid motor vehicles manufactured by the manufacturer of the vehicles referred to in subparagraph (A) sold for use in the United States after December 31, 2011, is at least 60,000. (C)

Applicable percentage

For purposes of subparagraph (A), the applicable percentage is— (i)50 percent for the first 2 calendar quarters of the phaseout period, (ii)25 percent for the 3d and 4th calendar quarters of the phaseout period, and (iii)0 percent for each calendar quarter thereafter. (D)

Controlled groups

For purposes of this subsection, rules similar to the rules of subsection (g)(4) shall apply.

(c)

Extension of termination

Subsection (k) of section 30B of such Code, as redesignated by this section, is amended by striking and at the end of paragraph (3), by redesignating paragraph (4) as paragraph (5), and by inserting after paragraph (3) the following new paragraph:

(4)in the case of a new flexible fuel hybrid motor vehicle (as described in subsection (e)), December 31, 2016, and

(d)

Conforming amendments

(1)Subparagraph (A) of section 30B(i)(5) of such Code, as redesignated by this section, is amended by striking subsection (e) and inserting subsection (f). (2)Paragraph (6) of section 30B(i) of such Code, as redesignated by this section, is amended by striking subsection (g) and inserting subsection (h). (3)Subsection (k) of section 30(B) of such Code, as redesignated by this section, is amended— (A)in paragraph (2), by inserting other than a new flexible fuel hybrid motor vehicle described in subsection (e) after a new qualified hybrid motor vehicle (as described in subsection (d)(2)(A)), (B)in paragraph (3), by inserting other than a new flexible fuel hybrid motor vehicle described in subsection (e) after a new qualified hybrid motor vehicle (as described in subsection (d)(2)(B)), and (C)in paragraph (5), as redesignated by this section, by striking subsection (e) and inserting subsection (f). (4)Subsection (b) of section 38 of such Code is amended by striking section 30B(g)(1) and inserting section 30B(h)(1). (5)Paragraph (36) of section 1016(a) of such Code is amended by striking section 30B(h)(4) and inserting section 30B(i)(4). (e)

Effective date

The amendments made by this section shall apply to property placed in service after December 31, 2011.