I 

109TH CONGRESS 

1ST SESSION H. R. 3152 

To amend the Internal Revenue Code of 1986 to provide tax incentives 

for the production of qualified hybrid motor vehicles. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 30, 2005 

Mr. CARNAHAN introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

tax incentives for the production of qualified hybrid 

motor vehicles. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. QUALIFIED HYBRID MOTOR VEHICLE CREDITS. 

4 (a) QUALIFIED HYBRID MOTOR VEHICLE PUR5 CHASERS CREDIT.— 

6 (1) IN GENERAL.—Subpart B of part IV of 

7 subchapter A of chapter 1 of the Internal Revenue 

8 Code of 1986 (relating to other credits) is amended 

9 by adding at the end the following: 
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1 ‘‘SEC. 30B. QUALIFIED HYBRID MOTOR VEHICLE PUR2 CHASERS CREDIT. 

3 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al4 lowed as a credit against the tax imposed by this chapter 

5 for the taxable year an amount equal to 65 percent of the 

6 sum of the credit amounts determined under subsection 

7 (b) with respect each qualified hybrid motor vehicle placed 

8 in service by the taxpayer during the taxable year. 

9 ‘‘(b) CREDIT AMOUNT.—For purposes of subsection 

10 (a)— 

11 ‘‘(1) FUEL ECONOMY.—The credit amount de12 termined under this paragraph shall be determined 

13 in accordance with the following table: 

‘‘In the case of a vehicle 

which achieves a fuel 

economy (expressed as a 

percentage of the 2002 model The credit 

year city fuel economy) of— amount is— 

At least 125 percent but less than 150 percent ................................ $400

At least 150 percent but less than 175 percent ................................ $800

At least 175 percent but less than 200 percent ................................ $1,200

At least 200 percent but less than 225 percent ................................ $1,600

At least 225 percent but less than 250 percent ................................ $2,000

At least 250 percent .......................................................................... $2,400. 

14 ‘‘(2) CONSERVATION CREDIT.—The amount de15 termined under paragraph (1) with respect to any 

16 vehicle shall be increased in accordance with the fol17 lowing table: 

‘‘In the case of a vehicle 

which achieves a lifetime 

fuel savings (expressed in The credit amount 

gallons of gasoline) of— shall be increased by— 

At least 1,200 but less than 1,800 .................................................... $250

At least 1,800 but less than 2,400 .................................................... $500
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‘‘In the case of a vehicle 

which achieves a lifetime 

fuel savings (expressed in The credit amount 

gallons of gasoline) of— shall be increased by—

At least 2,400 but less than 3,000 .................................................... $750

At least 3,000 .................................................................................... $1,000. 

1 ‘‘(c) NEW QUALIFIED HYBRID MOTOR VEHICLE.— 

2 For purposes of this section— 

3 ‘‘(1) IN GENERAL.—The term ‘new qualified 

4 hybrid motor vehicle’ means a motor vehicle— 

5 ‘‘(A) which draws propulsion energy from 

6 onboard sources of stored energy which are 

7 both— 

8 ‘‘(i) an internal combustion or heat 

9 engine using consumable fuel, and 

10 ‘‘(ii) a rechargeable energy storage 

11 system, 

12 ‘‘(B) which has received a certificate of 

13 conformity under the Clean Air Act and meets 

14 or exceeds the equivalent qualifying California 

15 low emission vehicle standard under section 

16 243(e)(2) of the Clean Air Act for that make 

17 and model year, and— 

18 ‘‘(i) in the case of a vehicle having a 

19 gross vehicle weight rating of 6,000 

20 pounds or less, the Bin 5 Tier II emission 

21 standard established in regulations pre22 scribed by the Administrator of the Envi-
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1 ronmental Protection Agency under section 

2 202(i) of the Clean Air Act for that make 

3 and model year vehicle, and 

4 ‘‘(ii) in the case of any other vehicle, 

5 the Bin 8 Tier II emission standard which 

6 is so established, 

7 ‘‘(C) which is a passenger automobile or 

8 light truck with a gross vehicle weight rating of 

9 not more than 8,500 pounds, 

10 ‘‘(D) which has a maximum available 

11 power of at least 4 percent, 

12 ‘‘(E) the original use of which commences 

13 with the taxpayer, 

14 ‘‘(F) which is acquired for use or lease by 

15 the taxpayer and not for resale, and 

16 ‘‘(G) which is made by a manufacturer. 

17 ‘‘(2) CONSUMABLE FUEL.—For purposes of 

18 paragraph (1)(A)(i), the term ‘consumable fuel’ 

19 means any solid, liquid, or gaseous matter which re20 leases energy when consumed by an auxiliary power 

21 unit. 

22 ‘‘(3) MAXIMUM AVAILABLE POWER.—The term 

23 ‘maximum available power’ means the maximum 

24 power available from the rechargeable energy stor25 age system, during a standard 10 second pulse 
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1 power or equivalent test, divided by such maximum 

2 power and the SAE net power of the heat engine. 

3 ‘‘(d) LIMITATION BASED ON AMOUNT OF TAX.—The 

4 credit allowed under subsection (a) for the taxable year 

5 shall not exceed the excess of— 

6 ‘‘(1) the sum of the regular tax liability (as de7 fined in section 26(b)) plus the tax imposed by sec8 tion 55, over 

9 ‘‘(2) the sum of the credits allowable under sub10 part A and sections 27 and 30 for the taxable year. 

11 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.— 

12 For purposes of this section— 

13 ‘‘(1) MOTOR VEHICLE.—The term ‘motor vehi14 cle’ has the meaning given such term by section 

15 30(c)(2). 

16 ‘‘(2) OTHER TERMS.—The terms ‘automobile’, 

17 ‘passenger automobile’, ‘light truck’, and ‘manufac18 turer’ have the meanings given such terms in regula19 tions prescribed by the Administrator of the Envi20 ronmental Protection Agency for purposes of the ad21 ministration of title II of the Clean Air Act (42 

22 U.S.C. 7521 et seq.). 

23 ‘‘(3) 2002 MODEL YEAR CITY FUEL ECON24 OMY.— 
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1 ‘‘(A) IN GENERAL.—The 2002 model year 

2 city fuel economy with respect to a vehicle shall 

3 be determined in accordance with the following 

4 tables: 

5 ‘‘(i) In the case of a passenger auto6 mobile: 

‘‘If vehicle inertia The 2002 model year 

weight class is: city fuel economy is: 

1,500 or 1,750 lbs ....................................................................... 45.2 mpg 

2,000 lbs ...................................................................................... 39.6 mpg 

2,250 lbs ...................................................................................... 35.2 mpg 

2,500 lbs ...................................................................................... 31.7 mpg 

2,750 lbs ...................................................................................... 28.8 mpg 

3,000 lbs ...................................................................................... 26.4 mpg 

3,500 lbs ...................................................................................... 22.6 mpg 

4,000 lbs ...................................................................................... 19.8 mpg 

4,500 lbs ...................................................................................... 17.6 mpg 

5,000 lbs ...................................................................................... 15.9 mpg 

5,500 lbs ...................................................................................... 14.4 mpg 

6,000 lbs ...................................................................................... 13.2 mpg 

6,500 lbs ...................................................................................... 12.2 mpg 

7,000 to 8,500 lbs ........................................................................ 11.3 mpg. 

7 ‘‘(ii) In the case of a light truck: 

‘‘If vehicle inertia The 2002 model year 

weight class is: city fuel economy is: 

1,500 or 1,750 lbs ....................................................................... 39.4 mpg 

2,000 lbs ...................................................................................... 35.2 mpg 

2,250 lbs ...................................................................................... 31.8 mpg 

2,500 lbs ...................................................................................... 29.0 mpg 

2,750 lbs ...................................................................................... 26.8 mpg 

3,000 lbs ...................................................................................... 24.9 mpg 

3,500 lbs ...................................................................................... 21.8 mpg 

4,000 lbs ...................................................................................... 19.4 mpg 

4,500 lbs ...................................................................................... 17.6 mpg 

5,000 lbs ...................................................................................... 16.1 mpg 

5,500 lbs ...................................................................................... 14.8 mpg 

6,000 lbs ...................................................................................... 13.7 mpg 

6,500 lbs ...................................................................................... 12.8 mpg 

7,000 to 8,500 lbs ........................................................................ 12.1 mpg. 

8 ‘‘(B) VEHICLE INERTIA WEIGHT CLASS.— 

9 For purposes of subparagraph (A), the term 

10 ‘vehicle inertia weight class’ has the same 
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1 meaning as when defined in regulations pre2 scribed by the Administrator of the Environ3 mental Protection Agency for purposes of the 

4 administration of title II of the Clean Air Act 

5 (42 U.S.C. 7521 et seq.). 

6 ‘‘(4) FUEL ECONOMY.—Fuel economy with re7 spect to any vehicle shall be measured under rules 

8 similar to the rules under section 4064(c). 

9 ‘‘(5) REDUCTION IN BASIS.—For purposes of 

10 this subtitle, if a credit is allowed under this section 

11 for any expenditure with respect to any property, the 

12 increase in the basis of such property which would 

13 (but for this paragraph) result from such expendi14 ture shall be reduced by the amount of the credit so 

15 allowed. 

16 ‘‘(6) NO DOUBLE BENEFIT.—The amount of 

17 any deduction or credit allowable under this chapter 

18 (other than the credits allowable under this section 

19 and section 30) shall be reduced by the amount of 

20 credit allowed under subsection (a) for such vehicle 

21 for the taxable year. 

22 ‘‘(7) RECAPTURE.—The Secretary shall, by reg23 ulations, provide for recapturing the benefit of any 

24 credit allowable under subsection (a) with respect to 

25 any property which ceases to be property eligible for 
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1 such credit (including recapture in the case of a 

2 lease period of less than the economic life of a vehi3 cle). 

4 ‘‘(8) PROPERTY USED OUTSIDE UNITED

5 STATES, ETC., NOT QUALIFIED.—No credit shall be 

6 allowed under subsection (a) with respect to any 

7 property referred to in section 50(b) or with respect 

8 to the portion of the cost of any property taken into 

9 account under section 179. 

10 ‘‘(9) ELECTION NOT TO TAKE CREDIT.—No 

11 credit shall be allowed under subsection (a) for any 

12 vehicle if the taxpayer elects to not have this section 

13 apply to such vehicle. 

14 ‘‘(10) BUSINESS CARRYOVERS ALLOWED.—If 

15 the credit allowable under subsection (a) for a tax16 able year exceeds the limitation under subsection (d) 

17 for such taxable year, such excess (to the extent of 

18 the credit allowable with respect to property subject 

19 to the allowance for depreciation) shall be allowed as 

20 a credit carryback and carryforward under rules 

21 similar to the rules of section 39. 

22 ‘‘(11) INTERACTION WITH MOTOR VEHICLE

23 SAFETY STANDARDS.—Unless otherwise provided in 

24 this section, a motor vehicle shall not be considered 

25 eligible for a credit under this section unless such 
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1 vehicle is in compliance with the motor vehicle safety 

2 provisions of sections 30101 through 30169 of title 

3 49, United States Code. 

4 ‘‘(f) REGULATIONS.— 

5 ‘‘(1) IN GENERAL.—The Secretary shall pro6 mulgate such regulations as necessary to carry out 

7 the provisions of this section. 

8 ‘‘(2) DETERMINATION OF MOTOR VEHICLE ELI9 GIBILITY.—The Secretary, after coordination with 

10 the Secretary of Transportation and the Adminis11 trator of the Environmental Protection Agency, shall 

12 prescribe such regulations as necessary to determine 

13 whether a motor vehicle meets the requirements to 

14 be eligible for a credit under this section. 

15 ‘‘(g) TERMINATION.—This section shall not apply to 

16 any property placed in service after December 31, 2009.’’. 

17 (2) CONFORMING AMENDMENTS.— 

18 (A) Section 30(d) of such Code (relating to 

19 special rules) is amended by adding at the end 

20 the following new paragraph: 

21 ‘‘(5) NO DOUBLE BENEFIT.—No credit shall be 

22 allowed under this section for any motor vehicle for 

23 which a credit is also allowed under section 30B.’’. 

24 (B) Section 1016(a) of such Code is 

25 amended by striking ‘‘and’’ at the end of para-
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1 graph (30), by striking the period at the end of 

2 paragraph (31) and inserting ‘‘, and’’, and by 

3 adding at the end the following: 

4 ‘‘(32) to the extent provided in section 

5 30B(e)(7).’’. 

6 (C) Section 6501(m) of such Code is 

7 amended by inserting ‘‘30B(e)(9),’’ after 

8 ‘‘30(d)(4),’’. 

9 (D) The table of sections for subpart B of 

10 part IV of subchapter A of chapter 1 of such 

11 Code is amended by inserting after the item re12 lating to section 30A the following: 

‘‘Sec. 30B. Qualified hybrid motor vehicle purchasers credit.’’. 

13 (3) EFFECTIVE DATE.—The amendments made 

14 by this section shall apply to property placed in serv15 ice after the date of the enactment of this Act, in 

16 taxable years ending after such date. 

17 (4) STICKER INFORMATION REQUIRED AT RE18 TAIL SALE.— 

19 (A) IN GENERAL.—The Secretary of the 

20 Treasury shall issue regulations under which 

21 each qualified vehicle sold at retail shall display 

22 a notice— 

23 (i) that such vehicle is a qualified ve24 hicle, and 
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1 (ii) that the buyer may not benefit 

2 from the credit allowed under section 30B 

3 of the Internal Revenue Code of 1986 if 

4 such buyer has insufficient tax liability. 

5 (B) QUALIFIED VEHICLE.—For purposes 

6 of paragraph (1), the term ‘‘qualified vehicle’’ 

7 means a vehicle with respect to which a credit 

8 is allowed under section 30B of the Internal 

9 Revenue Code of 1986. 

10 (b) QUALIFIED HYBRID MOTOR VEHICLE MANUFAC11 TURERS CREDIT.— 

12 (1) IN GENERAL.—Subpart D of part IV of 

13 subchapter A of chapter 1 of the Internal Revenue 

14 Code of 1986 (relating to business related credits) is 

15 amended by adding at the end the following new sec16 tion: 

17 ‘‘SEC. 45J. QUALIFIED HYBRID MOTOR VEHICLE MANUFAC18 TURERS CREDIT. 

19 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

20 qualified hybrid motor vehicle manufacturers credit deter21 mined under this section is 35 percent of the sum of the 

22 credit amounts determined under section 30B(b) with re23 spect to each qualified hybrid motor vehicle produced by 

24 the taxpayer. 
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1 ‘‘(b) DEFINITIONS.—For purposes of this section, 

2 any term used in this section which is also used in section 

3 30B shall have the meaning given such term by section 

4 30B.’’. 

5 (2) CREDIT TREATED AS BUSINESS CREDIT.— 

6 Section 38(b) of such Code is amended by striking 

7 ‘‘plus’’ at the end of paragraph (18), by striking the 

8 period at the end of paragraph (19) and inserting ‘‘, 

9 plus’’, and by adding at the end the following new 

10 paragraph: 

11 ‘‘(20) the qualified hybrid motor vehicle manu12 facturers credit determined under section 45J(a).’’. 

13 (3) CLERICAL AMENDMENT.—The table of sec14 tions for subpart D of part IV of subchapter A of 

15 chapter 1 of such Code is amended by adding at the 

16 end the following new item: 

‘‘Sec. 45J. Qualified hybrid motor vehicle manufacturers credit.’’. 

17 (4) EFFECTIVE DATE.—The amendments made 

18 by this section shall apply to property produced after 

19 the date of the enactment of this Act, in taxable 

20 years ending after such date. 

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