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DEQ.utah.gov - Utah Department of Environmental Quality

Division of Air Quality

Clean Fuel Vehicle Tax Credit

NOTICE:  Upcoming Program Changes


In 2008, the Utah Legislature revised the State’s Clean Air and Efficient Vehicle Tax Incentives. Because of this revision, different rules apply for vehicle's purchased before and after January 1, 2009.

The Clean Fuel Tax Credit for Vehicles purchased before January 1, 2009

Taxpayers may claim a nonrefundable credit on their individual income tax, corporate franchise tax or fiduciary tax returns for the purchase or conversion of vehicles that use cleaner burning fuels. In order for a taxpayer to claim this credit they must completely fill out tax form TC-40V PDF file.

A separate form must be completed for each vehicle claimed. The credit may only be taken once per vehicle. The vehicle must be certified and claimed in the taxable year in which the item is purchased or converted. If the credit claimed exceeds the tax liability for a taxable year, the credit that exceeds the liability may be carried forward for up to five taxable years.

How to Claim the Clean Fuel Vehicle Tax Credit

Taxpayers may claim a nonrefundable tax credit against state individual income tax, corporate franchise tax or fiduciary tax as follows:

Original Equipment Manufacturer (OEM) Vehicles:

50 percent of the incremental cost* of a new vehicle minus any grant received, up to per vehicle $3,000 per registered in Utah if:

  1. It is fueled by propane, natural gas, or electricity;
  2. It is fueled by another fuel determined by the Air Quality Board to be as effective as the above listed fuels; or
  3. It meets the clean fuel vehicle standards in the Clean Air Act; and
  4. A previous owner did not take the same credit.

* Incremental cost is the difference between the cost of a new clean fuel vehicle and the cost of the same model without the clean fuel system.

Note: A hybrid vehicle does not qualify for the clean fuel vehicle credit for tax years beginning after 2005.

Proof of purchase requirements for OEM vehicles can be found in R307-121-3.

Converted Vehicles:

50 percent of the cost of equipment for conversion minus any grant received, up to $2,500 per vehicle registered in Utah if:

  1. It is to be fueled by propane, natural gas, or electricity;
  2. It is to be fueled by another fuel determined by the Air Quality Board to be as effective as the above listed fuels; or
  3. It will meet the clean fuel vehicle standards in the Clean Air Act; and
  4. A previous owner did not take the same credit.

Proof of purchase requirements for vehicles converted to clean fuels can be found in R307-121-4.

Special Mobile Equipment Converted to Clean Fuels:

50 percent of the cost of equipment for conversion of special mobile equipment engine minus any grant received, up to maximum tax credit of $1,000 per special mobile equipment engine, if:

  1. It is to be fueled by propane, compressed natural gas, or electricity;
  2. It is to be fueled by another fuel determined by the Air Quality Board to be:
    • As effective as the above listed fuels, or
    • Substantially more effective in reducing air pollution than the fuel for which the engine was originally designed.
  3. A previous owner did not take the same credit.

Proof of purchase requirements for special mobile equipment converted to clean fuels can be found in R307-121-5.


The Clean Fuel Tax Credit for Vehicles purchased on or after January 1, 2009

The Utah Legislature revised the State’s Clean Air and Efficient Vehicle Tax Incentives during the 2008 legislative session. This revision reduced the tax credit for natural gas Original Equipment Manufacturer (OEM) vehicle to the lesser of $2500 or 35% of the vehicle's purchase price; other clean fuel vehicles may be eligible for a credit of up to $750 if they meet air quality and fuel economy standards. This revision also eliminates a provision that excludes hybrid electric- gasoline vehicles from the tax credit; however they would need to meet air quality and fuel economy standards to be eligible (Reference House Bill 106, 2008, Utah Code 59-7-605 and 59-10-127).

 

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