To amend the Internal Revenue Code of 1986 to provide a credit for qualified clean-fuel vehicles which are used in certain ozone nonattainment areas.

Summary: Clean Air Incentive Act of 2003 - Amends the Internal Revenue Code to allow a limited credit for qualified ozone attainment vehicle property. Defines such property as any qualified clean-fuel vehicle property, if substantially all of the use of such property is in an area designated as either: (1) a serious ozone nonattainment area; (2) a severe ozone nonattainment area; or (3) an extreme ozone nonattainment area.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Clean Air Incentive Act of 2003''.

SEC. 2. CREDIT FOR QUALIFIED OZONE ATTAINMENT VEHICLE PROPERTY.

    (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:

``SEC. 30B. CREDIT FOR QUALIFIED OZONE ATTAINMENT VEHICLE PROPERTY.

    ``(a) In General.--Under regulations prescribed by the Secretary, 
there shall be allowed as a credit against the tax imposed by this 
chapter for the taxable year an amount equal to the cost of any 
qualified ozone attainment vehicle property placed in service by the 
taxpayer during the taxable year.
    ``(b) Limitation.--The cost which may be taken into account under 
subsection (a) with respect to any vehicle is--
            ``(1) in the case of any vehicle not described in paragraph 
        (2)--
                    ``(A) $2,750 if credit is allowed by reason of 
                subsection (d)(1),
                    ``(B) $3,500 if credit is allowed by reason of 
                subsection (d)(2), and
                    ``(C) $4,000 if credit is allowed by reason of 
                subsection (d)(3),
            ``(2) in the case of any truck or van with a gross vehicle 
        weight rating greater than 10,000 pounds--
                    ``(A) $7,000 if credit is allowed by reason of 
                subsection (d)(1),
                    ``(B) $8,500 if credit is allowed by reason of 
                subsection (d)(2),
                    ``(C) $10,000 if credit is allowed by reason of 
                subsection (d)(3).
    ``(c) Application With Other Credits.--The credit allowed by 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        29, and 30, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(d) Qualified Ozone Attainment Vehicle Property.--For purposes of 
this section, the term `qualified ozone attainment vehicle property' 
means any qualified clean-fuel vehicle property (as defined in section 
179A(c)) if substantially all of the use of such property is in an area 
designated by the Administrator of the Environmental Protection Agency 
as--
            ``(1) a serious ozone nonattainment area,
            ``(2) a severe ozone nonattainment area, or
            ``(3) an extreme ozone nonattainment area.
    ``(e) Special Rules.--
            ``(1) Basis reduction.--The basis of any property for which 
        a credit is allowable under subsection (a) shall be reduced by 
        the amount of such credit (determined without regard to 
        subsection (c).
            ``(2) 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.
            ``(3) Property used outside united states, etc., not 
        qualified.--No credit shall be allowed under subsection (a) 
        with respect to any property referred to in section 50(b) or 
        with respect to the portion of the cost of any property taken 
        into account under section 179.
            ``(4) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.''.
    (b) Coordination With Deduction for Clean-Fuel Vehicles.--
Subsection (b) of section 179A of such Code (relating to limitations) 
is amended by adding at the end the following new paragraph:
            ``(3) Coordination with credit for qualified ozone 
        attainment vehicle property.--The cost which may be taken into 
        account under subsection (a)(1)(A) with respect to any motor 
        vehicle shall not exceed the excess (if any) of--
                    ``(A) the cost which would be so taken into account 
                without regard to this paragraph, over
                    ``(B) any credit allowed with respect to such 
                vehicle under section 30B.''.
    (c) Conforming Amendments.--
            (1) 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. 30B. Credit for qualified ozone 
                                        attainment vehicle property.''.

            (2) Section 1016(a) of such Code is amended by striking 
        ``and'' at the end of paragraph (27), by striking the period at 
        the end of paragraph (28) and inserting ``, and'', and by 
        adding at the end the following new paragraph:
            ``(29) to the extent provided in section 30B(e)(1).''.
            (3) Section 53(d)(1)(B)(iii) of such Code is amended to 
        read as follows:
                            ``(iii) Special rule.--The adjusted net 
                        minimum tax for the taxable year shall be 
                        increased by the sum of--
                                    ``(I) the amount of the credit not 
                                allowed under section 29 (relating to 
                                credit for producing fuel from a 
                                nonconventional source) solely by 
                                reason of the application of section 
                                29(b)(6)(B),
                                    ``(II) the amount of the credit not 
                                allowed under section 30 solely by 
                                reason of the application of section 
                                30(b)(3)(B), and
                                    ``(III) the amount of the credit 
                                not allowed under section 30B solely by 
                                reason of the application of section 
                                30B(c)(2).''.
            (4) Section 55(c)(2) of such Code is amended by inserting 
        ``30B(c),'' after ``30(b)(3),''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2003.