To amend the Internal Revenue Code of 1986 to repeal the phaseout of the credit for qualified electric vehicles, to repeal the phaseout of the deduction for clean-fuel vehicle property, and to exempt certain hybrid vehicles from the limitation on the depreciation of certain luxury automobiles.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fuel Efficiency Fairness Act of 
2004''.

SEC. 2. REPEAL OF PHASEOUT OF CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) In General.--Subsection (b) of section 30 of the Internal 
Revenue Code of 1986 is amended by striking paragraph (2) and by 
redesignating paragraph (3) as paragraph (2).
    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2003.

SEC. 3. REPEAL OF PHASEOUT OF DEDUCTION FOR CLEAN-FUEL VEHICLE 
              PROPERTY.

    (a) In General.--Paragraph (1) of section 179A(b) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(1) Qualified clean-fuel vehicle property.--The cost 
        which may be taken into account under subsection (a)(1)(A) with 
        respect to any motor vehicle shall not exceed--
                    ``(A) in the case of a motor vehicle not described 
                in subparagraph (B) or (C), $2,000,
                    ``(B) in the case of any truck or van with a gross 
                vehicle weight rating greater than 10,000 pounds but 
                not greater than 26,000 pounds, $5,000, or
                    ``(C) $50,000 in the case of--
                            ``(i) a truck or van with a gross vehicle 
                        weight rating greater than 26,000 pounds, or
                            ``(ii) any bus which has a seating capacity 
                        of at least 20 adults (not including the 
                        driver).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2003.

SEC. 4. EXCEPTION FOR HYBRID VEHICLES FROM LIMITATION ON DEPRECIATION 
              OF CERTAIN LUXURY VEHICLES.

    (a) In General.--Subparagraph (B) of section 280F(d)(5) of the 
Internal Revenue Code of 1986 is amended by striking ``and'' at the end 
of clause (ii), by striking the period at the end of clause (iii) and 
inserting ``, and'', and by adding at the end the following new clause:
                            ``(iv) any new qualified hybrid motor 
                        vehicle.''.
    (b) New Qualified Hybrid Motor Vehicle.--Subsection (d) of section 
280F of such Code is amended by adding at the end the following new 
paragraph:
            ``(11) New qualified hybrid motor vehicle.--
                    ``(A) The term `qualified hybrid motor vehicle' 
                means a passenger automobile (determined without regard 
                to paragraph (5)(B)(iv))--
                            ``(i) which is acquired for use or lease by 
                        the taxpayer and not for resale,
                            ``(ii) which is made by a manufacturer,
                            ``(iii) which draws propulsion energy 
                        from--
                                    ``(I) an internal combustion or 
                                heat engine using combustible fuel, and
                                    ``(II) a rechargeable onboard 
                                energy storage system which operates at 
                                no less than 100 volts and which 
                                provides a percentage of maximum 
                                available power of at least 5 percent,
                            ``(iv) which has received a certificate 
                        that such vehicle meets or exceeds the Bin 5 
                        Tier II emission level established in 
                        regulations prescribed by the Administrator of 
                        the Environmental Protection Agency under 
                        section 202(i) of the Clean Air Act for that 
                        make and model year vehicle, and
                            ``(v) which achieves at least 125 percent 
                        of the average 2002 model year city fuel 
                        economy in the vehicle inertia weight classes 
                        for the category of passenger automobile, light 
                        duty truck, or medium duty passenger vehicle 
                        (as defined and determined by the Environmental 
                        Protection Agency) to which it belongs.
                    ``(B) Vehicle inertia weight classes.--For purposes 
                of subparagraph (A)(v), the vehicle inertial weight 
                classes are--
                            ``(i) 1,500 and 1,750 pounds (calculated 
                        based on the 1,750 pound weight class),
                            ``(ii) 2,000 pounds,
                            ``(iii) 2,250 pounds,
                            ``(iv) 2,500 pounds,
                            ``(v) 2,750 pounds,
                            ``(vi) 3,000 pounds,
                            ``(vii) 3,500 pounds,
                            ``(viii) 4,000 pounds,
                            ``(ix) 4,500 pounds,
                            ``(x) 5,000 pounds,
                            ``(xi) 5,500 pounds, and
                            ``(xii) 6,000 pounds.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2003.

Summary: Fuel Efficiency Fairness Act of 2004 - Amends the Internal Revenue Code to: (1) repeal the phaseout of the tax credit for qualified electric vehicles. (2) repeal the phaseout of the tax deduction for qualified clean-fuel vehicle property. And (3) exempt new qualified hybrid motor vehicles from the limitations on the depreciation of luxury automobiles.