Credit for new motor vehicle purchases

(a)

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 new section:

30E.

New motor vehicles

(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 $3,000 with respect to each qualified motor vehicle placed in service by the taxpayer during the taxable year. (b)

Limitation on value of vehicles taken into account

No credit shall be allowed under subsection (a) with respect to any vehicle the fair market value of which equals or exceeds $40,000 (determined immediately before such vehicle is placed in service by the taxpayer). (c)

Limitations with respect to business credit

(1)

50 percent of credit allowed

50 percent of so much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to qualfied motor vehicles of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)). (2)

Not more than 2 vehicles taken into account

Not more than 2 qualified motor vehicles may be taken into account under paragraph (1). (3)

Aggregation rule

All persons treated as a single employer under subsection (a) or (b) of section 52, or subsection (m) or (o) of section 414, shall be treated as one person for purposes of the credit determined under this subsection. (d)

Personal credit

(1)

In general

For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined without regard ot any qualified motor vehicle of a character subject to an allowance for depreciation) shall be treated as a credit allowable under subpart A for such taxable year. (2)

Limitation based on amount of tax

In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year (determined without regard ot any qualified motor vehicle of a character subject to an allowance for depreciation) shall not exceed the excess of— (A)the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over (B)the sum of the credits allowable under subpart A (other than this section and sections 23, 25D, 30, and 30D) and section 27 for the taxable year. (e)

Qualified motor vehicle

For purposes of this section— (1)

In general

The term qualified motor vehicle means a motor vehicle— (A)the original use of which commences with the taxpayer, (B)which is acquired for use or lease by the taxpayer and not for resale, and (C)which is made by a manufacturer, (D)the final assembly of which is in the United States, (E)which is treated as a motor vehicle for purposes of title II of the Clean Air Act, and (F)which has a gross vehicle weight rating of not more than 8,500 pounds. (2)

Motor vehicle; manufacturer

The terms motor vehicle and manufacturer have the meaning given such terms in section 30D(d). (f)

Special rules

For purposes of this section— (1)

Reduction in basis

For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed (determined without regard to subsections (c) and (d)). (2)

No double benefit

The amount of any deduction or other credit allowable under this chapter for a qualified motor vehicle shall be reduced by the amount of credit allowed under subsection (a) for such vehicle (determined without regard to subsections (c) and (d)). (3)

Property used by tax-exempt entity

In the case of a vehicle the use of which is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such vehicle to the person or entity using such vehicle shall be treated as the taxpayer that placed such vehicle in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such vehicle (determined without regard to subsections (c) and (d)). Property to which this paragraph applies shall be treated for purposes of subsections (c) and (d) as property of a character subject to an allowance for depreciation. (4)

Property used outside United States not qualified

No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1). (5)

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. (6)

Election to not take credit

No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects not to have this section apply to such vehicle. (7)

Interaction with air quality and 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— (A)the applicable provisions of the Clean Air Act for the applicable make and model year of the vehicle (or applicable air quality provisions of State law in the case of a State which has adopted such provision under a waiver under section 209(b) of the Clean Air Act), and (B)the motor vehicle safety provisions of sections 30101 through 30169 of title 49, United States Code. (g)

Termination

No credit shall be allowed under this section with respect to any vehicle placed in service after December 31, 2009.

(b)

Credit made part of general business credit

Section 38(b) of such Code is amended by striking plus at the end of paragraph (34), by striking the period at the end of paragraph (35) and inserting , plus, and by adding at the end the following new paragraph:

(36)the portion of the new motor vehicle credit to which section 30E(c) applies.

(c)

Conforming amendments

(1)(A)Section 24(b)(3)(B) of such Code is amended by striking and 30D and inserting 30D, and 30E. (B)Section 25(e)(1)(C)(ii) of such Code is amended by inserting 30E, after 30D,. (C)Section 25B(g)(2) of such Code is amended by striking and 30D and inserting , 30D, and 30E. (D)Section 26(a)(1) of such Code is amended by striking and 30D and inserting 30D, and 30E. (E)Section 904(i) of such Code is amended by striking and 30D and inserting 30D, and 30E. (F)Section 1400C(d)(2) of such Code is amended by striking and 30D and inserting 30D, and 30E. (2)Section 1016(a) of such Code is amended by striking and at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting , and, and by adding at the end the following new paragraph:

(38)to the extent provided in section 30E(f)(1).

(3)Section 6501(m) of such Code is amended by inserting 30E(f)(6), after 30D(e)(4),. (4)The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

Sec. 30E. New motor vehicles.

(d)

Effective date

The amendments made by this section shall apply to vehicles acquired after December 31, 2008, in taxable years ending after such date. (e)

Application of EGTRRA sunset

The amendment made by subsection (c)(1)(A) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 in the same manner as the provision of such Act to which such amendment relates.