Panel Approves Bill Extending Tax Credits for New Trucks, Alternative-Fuel Producers

This story appears in the April 14 print edition of Transport Topics.

A bill that would extend tax credits for carriers buying new trucks and to those who produce biodiesel or supply trucks with natural gas has been approved by the Senate Finance Committee.

The tax credits championed by the trucking industry expired Dec. 31 but were included in a list of more than 40 credits that the committee voted on April 3 to extend for two years.

“By passing this bill, the Finance Committee has put an expiration date on the status quo,” said Chairman Ron Wyden (D-Ore.) “The stop-and-go nature of these tax extenders contributes to the lack of certainty and predictability America needs to create more family wage jobs,” he said.

Wyden is sponsoring the bill along with the committee’s ranking member, Sen. Orrin Hatch (R-Utah).

Under the bill, titled the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, a tax credit of up to $30,000 also would be continued for two years for those who build alternative-vehicle refueling stations.

However, the committee vote was only the first step in getting a bill passed in the full Senate, and no bill has been introduced in the House.

“That’s the big question: Can this get past the finish line?” said Glen Kedzie, vice president for environmental affairs and assistant general counsel for American Trucking Associations.

The natural gas and propane tax credits, if reinstated, would be 50 cents per gallon and would go to those who own the fuel and pump it into trucks.

That means that, in addition to fuel station owners, fleets that have built their own natural gas and propane fueling facilities for their trucks would be eligible for the credit.

The credit has helped underwrite the trucking industry’s evolution to natural gas-powered trucks, which have a higher cost than trucks powered by diesel.

And many fleets use propane to power their forklifts in warehouse operations, Kedzie said.

The bill also would continue for two more years the $1 per gallon tax credit that goes to producers of biodiesel, another alternative fuel. That tax credit has been vital in helping to defray the higher cost of biodiesel compared with regular diesel.

Three years ago, when Congress failed to renew the tax credit, dozens of biodiesel production plants closed their doors.

The bonus depreciation tax incentive, started during the recession, has allowed businesses, including the trucking industry, to write off 100% of the cost of equipment in the same year as it was purchased.

For carriers, that incentive means they could depreciate the cost of anything from trucks and trailers to new computers or dispatching equipment.

Normally, businesses have to spread their depreciation write-offs over two or three years, but the bonus depreciation was adopted in an effort to boost the manufacturing sector during the global downturn.

The trucking industry strongly supported the bonus depreciation measure, saying that it helped fleets to buy alternative-fueled vehicles and the newer diesel-powered models that are more fuel-efficient and produce fewer emissions.