To amend the Internal Revenue Code of 1986 to increase the credit for certain alternative motor vehicles assembled in the United States and to increase the credit for research related to alternative motor vehicle technology.

Summary: American Hybrid Tax Credit Act of 2005 - Amends the Internal Revenue Code to increase by $3,000 the allowable amount of the tax credit for alternative motor vehicles (i.e., qualified fuel cell vehicles, advanced lean burn technology motor vehicles, hybrid vehicles, and alternative fuel motor vehicles) which are assembled in the United States.

Allows a 20% increase in the tax credit for increasing research activities for U.S.-based research on alternative motor vehicle technology. Makes such credit refundable for certain small businesses.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Hybrid Tax Credit Act of 
2005''.

SEC. 2. INCREASED CREDIT AMOUNT FOR ALTERNATIVE MOTOR VEHICLES 
              ASSEMBLED IN THE UNITED STATES.

    (a) Increased Credit Amount.--
            (1) New qualified fuel cell motor vehicle credit.--
        Subsection (b) of section 30B of the Internal Revenue Code of 
        1986 (relating to alternative motor vehicle credit) is amended 
        by inserting at the end the following new paragraph:
            ``(4) Domestic assembly increase.--Except as provided in 
        subsection (h)(11), the amount determined under paragraph (1) 
        with respect to a new qualified fuel cell motor vehicle which 
        is assembled in the United States shall be increased by 
        $3,000.''.
            (2) New advanced lean burn technology motor vehicle 
        credit.--Subsection (c)(2) of such section of such Code is 
        amended by inserting at the end the following new subparagraph:
                    ``(C) Domestic assembly increase.--Except as 
                provided in subsection (h)(11), the amount determined 
                under this paragraph with respect to a new advanced 
                lean burn technology motor vehicle which is assembled 
                in the United States shall be increased by $3,000.''.
            (3) New qualified hybrid motor vehicle credit.--Subsection 
        (d)(2) of such section of such credit is amended by inserting 
        at the end the following new subparagraph:
                    ``(C) Domestic assembly increase.--Except as 
                provided in subsection (h)(11), the amount determined 
                under this paragraph with respect to a new qualified 
                hybrid motor vehicle which is assembled in the United 
                States shall be increased by $3,000.''.
            (4) New qualified alternative fuel motor vehicle credit.--
        Subsection (e) of such section of such Code is amended by 
        inserting at the end the following new paragraph:
            ``(6) Domestic assembly increase.--Except as provided in 
        subsection (h)(11), the amount determined under paragraph (1) 
        with respect to a new advanced qualified alternative fuel motor 
        vehicle which is assembled in the United States shall be 
        increased by $3,000.''.
            (5) Dollar limitation.--Subsection (h) of such section of 
        such Code is amended by inserting at the end the following new 
        paragraph:
            ``(11) Dollar limitation.--In determining the amount of the 
        credit allowed under this section for a taxpayer during a 
        taxable year, the total dollar amount of the increases 
        described in subsections (b)(4), (c)(2)(C), (d)(2)(C), and 
        (e)(6) with respect to such taxpayer during the taxable year 
        shall not exceed $6,000.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in section 1341 of the Energy Policy Act of 2005.

SEC. 3. INCREASED CREDIT AMOUNT FOR RESEARCH RELATED TO ALTERNATIVE 
              MOTOR VEHICLE TECHNOLOGY.

    (a) Research Credit.--Section 41 (relating to credit for increasing 
research activities) is amended by adding at the end the following new 
subsection:
    ``(i) Certain Technologies.--
            ``(1) Increased credit amount.--In the case of expenses 
        relating to a technology described in paragraph (2), subsection 
        (a)(1) shall be applied by substituting `40 percent' for `20 
        percent'.
            ``(2) Technology described.--A technology described in this 
        paragraph is a technology which enables a vehicle to qualify 
        for the alternative motor vehicle credit under section 30B, as 
        determined by the Secretary, and which is--
                    ``(A) a fuel cell described in section 30B(b)(3),
                    ``(B) a hybrid motor vehicle technology described 
                in paragraphs (2) or (3) of section 30B(c),
                    ``(C) an alternative fuel motor vehicle technology 
                described in section 30B(d)(4),
                    ``(D) an advanced diesel motor vehicle technology 
                described in section 30B(e), or
                    ``(E) an energy storage technology for motor 
                vehicles.
            ``(3) Domestic production requirement.--An expense shall be 
        treated as not described in paragraph (1) unless any research 
        qualified under this section is conducted substantially within 
        the United States.
            ``(4) Technology portion of credit refundable for small 
        businesses.--
                    ``(A) In general.--In the case of an eligible small 
                business, the portion of the credit which is 
                attributable to expenses relating to technologies 
                described in paragraph (2) and which would (but for 
                subparagraph (B)) be allowable under this section shall 
                be treated for purposes of this title as a credit 
                allowed under subpart C.
                    ``(B) No double benefit.--The amount of the credit 
                allowed under this section shall be reduced by the 
                amount of any credit treated as allowed under subpart C 
                by reason of subparagraph (A).
                    ``(C) Eligible small business.--For purposes of 
                this paragraph, a taxpayer is an eligible small 
                business for any taxable year if the average annual 
                gross receipts of the taxpayer for the 3 preceding 
                taxable years do not exceed $5,000,000. For purposes of 
                the preceding sentence, rules similar to the rules of 
                paragraphs (2) and (3) of section 448(c) shall 
                apply.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.