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14,000 pounds but not more than 26,000
pounds:
‘‘If the model year is:
The increased credit amount is:
2002 ................................................................................................
$9,000
2003 ................................................................................................
$7,750
2004 ................................................................................................
$6,500
2005 ................................................................................................
$5,250
2006 ................................................................................................
$4,000.
‘‘(iii) In the case of a vehicle which has
a gross vehicle weight rating of more than
26,000 pounds:
‘‘If the model year is:
The increased credit amount is:
2002 ................................................................................................
$14,000
2003 ................................................................................................
$12,000
2004 ................................................................................................
$10,000
2005 ................................................................................................
$8,000
2006 ................................................................................................
$6,000.
‘‘(D) DEFINITIONS.—
‘‘(i) APPLICABLE HEAVY DUTY HYBRID
MOTOR VEHICLE.—For purposes of subpara-
graph (C), the term ‘applicable heavy duty
hybrid motor vehicle’ means a heavy duty
hybrid motor vehicle which is powered by
an internal combustion or heat engine
which is certified as meeting the emission
standards set in the regulations prescribed
by the Administrator of the Environmental
Protection Agency for 2007 and later model
year diesel heavy duty engines, or for 2008
and later model year ottocycle heavy duty
engines, as applicable.
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HR 4 EAS
‘‘(ii) HEAVY DUTY HYBRID MOTOR VE-
HICLE.—For purposes of this paragraph,
the term ‘heavy duty hybrid motor vehicle’
means a new qualified hybrid motor vehicle
which has a gross vehicle weight rating of
more than 10,000 pounds and draws pro-
pulsion energy from both of the following
onboard sources of stored energy:
‘‘(I) An internal combustion or
heat engine using consumable fuel
which, for 2002 and later model vehi-
cles, has received a certificate of con-
formity under the Clean Air Act and
meets or exceeds a level of not greater
than 3.0 grams per brake horsepower–
hour of oxides of nitrogen and 0.01 per
brake horsepower–hour of particulate
matter.
‘‘(II) A rechargeable energy stor-
age system.
‘‘(iii) MAXIMUM AVAILABLE POWER.—
‘‘(I) PASSENGER AUTOMOBILE OR
LIGHT TRUCK.—For purposes of sub-
paragraph (A)(i), the term ‘maximum
available power’ means the maximum
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HR 4 EAS
power available from the rechargeable
energy storage system, during a stand-
ard 10 second pulse power or equiva-
lent test, divided by such maximum
power and the SAE net power of the
heat engine.
‘‘(II) HEAVY DUTY HYBRID MOTOR
VEHICLE.—For purposes of subpara-
graph (A)(ii), the term ‘maximum
available power’ means the maximum
power available from the rechargeable
energy storage system, during a stand-
ard 10 second pulse power or equiva-
lent test, divided by the vehicle’s total
traction power. The term ‘total trac-
tion power’ means the sum of the peak
power from the rechargeable energy
storage system and the heat engine
peak power of the vehicle, except that if
such storage system is the sole means
by which the vehicle can be driven, the
total traction power is the peak power
of such storage system.
‘‘(3) NEW
QUALIFIED
HYBRID
MOTOR
VEHI-
CLE.—For purposes of this subsection, the term ‘new
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HR 4 EAS
qualified hybrid motor vehicle’ means a motor
vehicle—
‘‘(A) which draws propulsion energy from
onboard sources of stored energy which are
both—
‘‘(i) an internal combustion or heat en-
gine using combustible fuel, and
‘‘(ii) a rechargeable energy storage sys-
tem,
‘‘(B) which, in the case of a passenger auto-
mobile or light truck—
‘‘(i) for 2002 and later model vehicles,
has received a certificate of conformity
under the Clean Air Act and meets or ex-
ceeds the equivalent qualifying California
low emission vehicle standard under section
243(e)(2) of the Clean Air Act for that make
and model year, and
‘‘(ii) for 2004 and later model vehicles,
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
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the Clean Air Act for that make and model
year vehicle,
‘‘(C) the original use of which commences
with the taxpayer,
‘‘(D) which is acquired for use or lease by
the taxpayer and not for resale, and
‘‘(E) which is made by a manufacturer.
‘‘(d) NEW QUALIFIED ALTERNATIVE FUEL MOTOR VE-
HICLE CREDIT.—
‘‘(1) ALLOWANCE OF CREDIT.—Except as pro-
vided in paragraph (5), the credit determined under
this subsection is an amount equal to the applicable
percentage of the incremental cost of any new quali-
fied alternative fuel motor vehicle placed in service by
the taxpayer during the taxable year.
‘‘(2) APPLICABLE
PERCENTAGE.—For purposes
of paragraph (1), the applicable percentage with re-
spect to any new qualified alternative fuel motor vehi-
cle is—
‘‘(A) 40 percent, plus
‘‘(B) 30 percent, if such vehicle—
‘‘(i) has received a certificate of con-
formity under the Clean Air Act and meets
or exceeds the most stringent standard
available for certification under the Clean
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HR 4 EAS
Air Act for that make and model year vehi-
cle (other than a zero emission standard), or
‘‘(ii) has received an order certifying
the vehicle as meeting the same require-
ments as vehicles which may be sold or
leased in California and meets or exceeds
the most stringent standard available for
certification under the State laws of Cali-
fornia (enacted in accordance with a waiver
granted under section 209(b) of the Clean
Air Act) for that make and model year vehi-
cle (other than a zero emission standard).
‘‘(3) INCREMENTAL COST.—For purposes of this
subsection, the incremental cost of any new qualified
alternative fuel motor vehicle is equal to the amount
of the excess of the manufacturer’s suggested retail
price for such vehicle over such price for a gasoline
or diesel fuel motor vehicle of the same model, to the
extent such amount does not exceed—
‘‘(A) $5,000, if such vehicle has a gross ve-
hicle weight rating of not more than 8,500
pounds,
‘‘(B) $10,000, if such vehicle has a gross ve-
hicle weight rating of more than 8,500 pounds
but not more than 14,000 pounds,
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HR 4 EAS
‘‘(A) IN GENERAL.—In the case of a mixed-
fuel vehicle placed in service by the taxpayer
during the taxable year, the credit determined
under this subsection is an amount equal to—
‘‘(i) in the case of a 75/25 mixed-fuel
vehicle, 70 percent of the credit which would
have been allowed under this subsection if
such vehicle was a qualified alternative fuel
motor vehicle, and
‘‘(ii) in the case of a 90/10 mixed-fuel
vehicle, 90 percent of the credit which would
have been allowed under this subsection if
such vehicle was a qualified alternative fuel
motor vehicle.
‘‘(B) MIXED-FUEL VEHICLE.—For purposes
of this subsection, the term ‘mixed-fuel vehicle’
means any motor vehicle described in subpara-
graph (C) or (D) of paragraph (3), which—
‘‘(i) is certified by the manufacturer as
being able to perform efficiently in normal
operation on a combination of an alter-
native fuel and a petroleum-based fuel,
‘‘(ii) either—
‘‘(I) has received a certificate of
conformity under the Clean Air Act, or
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‘‘(II) has received an order certi-
fying the vehicle as meeting the same
requirements as vehicles which may be
sold or leased in California and meets
or exceeds the low emission vehicle
standard under section 88.105-94 of
title 40, Code of Federal Regulations,
for that make and model year vehicle,
‘‘(iii) the original use of which com-
mences with the taxpayer,
‘‘(iv) which is acquired by the tax-
payer for use or lease, but not for resale,
and
‘‘(v) which is made by a manufacturer.
‘‘(C) 75/25 
MIXED-FUEL
VEHICLE.—For
purposes of this subsection, the term ‘75/25
mixed-fuel vehicle’ means a mixed-fuel vehicle
which operates using at least 75 percent alter-
native fuel and not more than 25 percent petro-
leum-based fuel.
‘‘(D) 90/10 
MIXED-FUEL
VEHICLE.—For
purposes of this subsection, the term ‘90/10
mixed-fuel vehicle’ means a mixed-fuel vehicle
which operates using at least 90 percent alter-
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native fuel and not more than 10 percent petro-
leum-based fuel.
‘‘(e) APPLICATION WITH OTHER CREDITS.—The credit
allowed under 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.
‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—For
purposes of this section—
‘‘(1) CONSUMABLE FUEL.—The term ‘consumable
fuel’ means any solid, liquid, or gaseous matter which
releases energy when consumed by an auxiliary power
unit.
‘‘(2) MOTOR VEHICLE.—The term ‘motor vehicle’
has the meaning given such term by section 30(c)(2).
‘‘(3) CITY FUEL ECONOMY.—The city fuel econ-
omy with respect to any vehicle shall be measured in
a manner which is substantially similar to the man-
ner city fuel economy is measured in accordance with
procedures under part 600 of subchapter Q of chapter
I of title 40, Code of Federal Regulations, as in effect
on the date of the enactment of this section.
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‘‘(4) OTHER
TERMS.—The terms ‘automobile’,
‘passenger automobile’, ‘light truck’, and ‘manufac-
turer’ have the meanings given such terms in regula-
tions prescribed by the Administrator of the Environ-
mental Protection Agency for purposes of the admin-
istration of title II of the Clean Air Act (42 U.S.C.
7521 et seq.).
‘‘(5) REDUCTION IN BASIS.—For purposes of this
subtitle, the basis of any property for which a credit
is allowable under subsection (a) shall be reduced by
the amount of such credit so allowed (determined
without regard to subsection (e)).
‘‘(6) NO DOUBLE BENEFIT.—The amount of any
deduction or other credit allowable under this
chapter—
‘‘(A) for any incremental cost taken into ac-
count in computing the amount of the credit de-
termined under subsection (d) shall be reduced
by the amount of such credit attributable to such
cost, and
‘‘(B) with respect to a vehicle described
under subsection (b) or (c), shall be reduced by
the amount of credit allowed under subsection
(a) for such vehicle for the taxable year.
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‘‘(7) PROPERTY
USED
BY
TAX-EXEMPT
ENTI-
TIES.—In the case of a credit amount which is allow-
able with respect to a motor vehicle which is acquired
by an entity exempt from tax under this chapter, the
person which sells or leases such vehicle to the entity
shall be treated as the taxpayer with respect to the ve-
hicle for purposes of this section and the credit shall
be allowed to such person, but only if the person
clearly discloses to the entity at the time of any sale
or lease the specific amount of any credit otherwise
allowable to the entity under this section.
‘‘(8) RECAPTURE.—The Secretary shall, by regu-
lations, 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 (including recapture in the case of a lease
period of less than the economic life of a vehicle).
‘‘(9) PROPERTY USED OUTSIDE UNITED STATES,
ETC., NOT
QUALIFIED.—No credit shall be allowed
under subsection (a) with respect to any property re-
ferred to in section 50(b) or with respect to the por-
tion of the cost of any property taken into account
under section 179.
‘‘(10) ELECTION
TO
NOT
TAKE
CREDIT.—No
credit shall be allowed under subsection (a) for any
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vehicle if the taxpayer elects to not have this section
apply to such vehicle.
‘‘(11) CARRYBACK
AND
CARRYFORWARD
AL-
LOWED.—
‘‘(A) IN GENERAL.—If the credit amount al-
lowable under subsection (a) for a taxable year
exceeds the amount of the limitation under sub-
section (e) for such taxable year (in this para-
graph referred to as the ‘unused credit year’),
such excess shall be allowed as a credit carryback
for each of the 3 taxable years beginning after
September 30, 2002, which precede the unused
credit year and a credit carryforward for each of
the 20 taxable years which succeed the unused
credit year.
‘‘(B) RULES.—Rules similar to the rules of
section 39 shall apply with respect to the credit
carryback and credit carryforward under sub-
paragraph (A).
‘‘(12) INTERACTION
WITH
AIR
QUALITY
AND
MOTOR VEHICLE SAFETY STANDARDS.—Unless other-
wise provided in this section, a motor vehicle shall
not be considered eligible for a credit under this sec-
tion unless such vehicle is in compliance with—
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‘‘(A) the applicable provisions of the Clean
Air Act for the applicable make and model year
of the vehicle (or applicable air quality provi-
sions of State law in the case of a State which
has adopted such provision under a waiver
under section 209(b) of the Clean Air Act), and
‘‘(B) the motor vehicle safety provisions of
sections 30101 through 30169 of title 49, United
States Code.
‘‘(g) REGULATIONS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the Secretary shall promulgate such regula-
tions as necessary to carry out the provisions of this
section.
‘‘(2) COORDINATION IN PRESCRIPTION OF CER-
TAIN REGULATIONS.—The Secretary of the Treasury,
in coordination with the Secretary of Transportation
and the Administrator of the Environmental Protec-
tion Agency, shall prescribe such regulations as nec-
essary to determine whether a motor vehicle meets the
requirements to be eligible for a credit under this sec-
tion.
‘‘(h) TERMINATION.—This section shall not apply to
any property purchased after—
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‘‘(1) in the case of a new qualified fuel cell motor
vehicle (as described in subsection (b)), December 31,
2011, and
‘‘(2) in the case of any other property, December
31, 2006.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1016(a) 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(f)(5).’’.
(2) Section 55(c)(2) is amended by inserting
‘‘30B(e),’’ after ‘‘30(b)(3)’’.
(3) Section 6501(m) is amended by inserting
‘‘30B(f)(10),’’ after ‘‘30(d)(4),’’.
(4) The table of sections for subpart B of part IV
of subchapter A of chapter 1 is amended by inserting
after the item relating to section 30A the following
new item:
‘‘Sec. 30B. Alternative motor vehicle credit.’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after Sep-
tember 30, 2002, in taxable years ending after such date.
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SEC. 2002. MODIFICATION OF CREDIT FOR QUALIFIED
ELECTRIC VEHICLES.
(a) AMOUNT OF CREDIT.—
(1) IN GENERAL.—Section 30(a) (relating to al-
lowance of credit) is amended by striking ‘‘10 percent
of’’.
(2) LIMITATION OF CREDIT ACCORDING TO TYPE
OF VEHICLE.—Section 30(b) (relating to limitations)
is amended—
(A) by striking paragraphs (1) and (2) and
inserting the following new paragraph:
‘‘(1) LIMITATION ACCORDING TO TYPE OF VEHI-
CLE.—The amount of the credit allowed under sub-
section (a) for any vehicle shall not exceed the greatest
of the following amounts applicable to such vehicle:
‘‘(A) In the case of a vehicle which conforms
to the Motor Vehicle Safety Standard 500 pre-
scribed by the Secretary of Transportation, as in
effect on the date of the enactment of the Energy
Tax Incentives Act of 2002, the lesser of—
‘‘(i) 10 percent of the manufacturer’s
suggested retail price of the vehicle, or
‘‘(ii) $1,500.
‘‘(B) In the case of a vehicle not described
in subparagraph (A) with a gross vehicle weight
rating not exceeding 8,500 pounds—
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‘‘(i) $3,500, or
‘‘(ii) $6,000, if such vehicle is—
‘‘(I) capable of a driving range of
at least 100 miles on a single charge of
the vehicle’s rechargeable batteries as
measured pursuant to the urban dyna-
mometer schedules under appendix I to
part 86 of title 40, Code of Federal
Regulations, or
‘‘(II) capable of a payload capac-
ity of at least 1,000 pounds.
‘‘(C) In the case of a vehicle with a gross
vehicle weight rating exceeding 8,500 but not ex-
ceeding 14,000 pounds, $10,000.
‘‘(D) In the case of a vehicle with a gross
vehicle weight rating exceeding 14,000 but not
exceeding 26,000 pounds, $20,000.
‘‘(E) In the case of a vehicle with a gross
vehicle weight rating exceeding 26,000 pounds,
$40,000.’’, and
(B) by redesignating paragraph (3) as
paragraph (2).
(3) CONFORMING AMENDMENTS.—
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(A) Section 53(d)(1)(B)(iii) is amended by
striking ‘‘section 30(b)(3)(B)’’ and inserting
‘‘section 30(b)(2)(B)’’.
(3) Section 55(c)(2), as amended by this Act, is
amended by striking ‘‘30(b)(3)’’ and inserting
‘‘30(b)(2)’’.
(b) QUALIFIED BATTERY ELECTRIC VEHICLE.—
(1) IN GENERAL.—Section 30(c)(1)(A) (defining
qualified electric vehicle) is amended to read as fol-
lows:
‘‘(A) which is—
‘‘(i) operated solely by use of a battery
or battery pack, or
‘‘(ii) powered primarily through the
use of an electric battery or battery pack
using a flywheel or capacitor which stores
energy produced by an electric motor
through regenerative braking to assist in ve-
hicle operation,’’.
(2) LEASED VEHICLES.—Section 30(c)(1)(C) is
amended by inserting ‘‘or lease’’ after ‘‘use’’.
(3) CONFORMING AMENDMENTS.—
(A) Subsections (a), (b)(2), and (c) of sec-
tion 30 are each amended by inserting ‘‘battery’’
after ‘‘qualified’’ each place it appears.
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(B) The heading of subsection (c) of section
30 is amended by inserting ‘‘BATTERY’’ after
‘‘QUALIFIED’’.
(C) The heading of section 30 is amended
by inserting ‘‘BATTERY’’ after ‘‘QUALIFIED’’.
(D) The item relating to section 30 in the
table of sections for subpart B of part IV of sub-
chapter A of chapter 1 is amended by inserting
‘‘battery’’ after ‘‘qualified’’.
(E) Section 179A(c)(3) is amended by in-
serting ‘‘battery’’ before ‘‘electric’’.
(F) The heading of paragraph (3) of section
179A(c) is amended by inserting ‘‘BATTERY’’ be-
fore ‘‘ELECTRIC’’.
(c) ADDITIONAL SPECIAL RULES.—Section 30(d) (re-
lating to special rules) is amended by adding at the end
the following new paragraphs:
‘‘(5) NO DOUBLE BENEFIT.—The amount of any
deduction or other credit allowable under this chapter
for any cost taken into account in computing the
amount of the credit determined under subsection (a)
shall be reduced by the amount of such credit attrib-
utable to such cost.
‘‘(6) PROPERTY
USED
BY
TAX-EXEMPT
ENTI-
TIES.—In the case of a credit amount which is allow-
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able with respect to a vehicle which is acquired by an
entity exempt from tax under this chapter, the person
which sells or leases such vehicle to the entity shall be
treated as the taxpayer with respect to the vehicle for
purposes of this section and the credit shall be allowed
to such person, but only if the person clearly discloses
to the entity at the time of any sale or lease the spe-
cific amount of any credit otherwise allowable to the
entity under this section.
‘‘(7) 
CARRYBACK
AND
CARRYFORWARD
AL-
LOWED.—
‘‘(A) IN GENERAL.—If the credit amount al-
lowable under subsection (a) for a taxable year
exceeds the amount of the limitation under sub-
section (b)(2) for such taxable year (in this para-
graph referred to as the ‘unused credit year’),
such excess shall be allowed as a credit carryback
for each of the 3 taxable years beginning after
September 30, 2002, which precede the unused
credit year and a credit carryforward for each of
the 20 taxable years which succeed the unused
credit year.
‘‘(B) RULES.—Rules similar to the rules of
section 39 shall apply with respect to the credit
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carryback and credit carryforward under sub-
paragraph (A).’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after Sep-
tember 30, 2002, in taxable years ending after such date.
SEC. 2003. CREDIT FOR INSTALLATION OF ALTERNATIVE
FUELING STATIONS.
(a) IN GENERAL.—Subpart B of part IV of subchapter
A of chapter 1 (relating to foreign tax credit, etc.), as
amended by this Act, is amended by adding at the end the
following new section:
‘‘SEC. 30C. CLEAN-FUEL VEHICLE REFUELING PROPERTY
CREDIT.
‘‘(a) CREDIT ALLOWED.—There shall be allowed as a
credit against the tax imposed by this chapter for the tax-
able year an amount equal to 50 percent of the amount
paid or incurred by the taxpayer during the taxable year
for the installation of qualified clean-fuel vehicle refueling
property.
‘‘(b) LIMITATION.—The credit allowed under sub-
section (a)—
‘‘(1) with respect to any retail clean-fuel vehicle
refueling property, shall not exceed $30,000, and
‘‘(2) with respect to any residential clean-fuel ve-
hicle refueling property, shall not exceed $1,000.
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rules similar to the rules of subsection (d) of section 52 shall
apply.
‘‘(e) TERMINATION.—This section shall not apply to
any fuel sold at retail after December 31, 2006.’’.
(b) CREDIT TREATED AS BUSINESS CREDIT.—Section
38(b) (relating to current year business credit) is amended
by striking ‘‘plus’’ at the end of paragraph (14), by striking
the period at the end of paragraph (15) and inserting ‘‘,
plus’’, and by adding at the end the following new para-
graph:
‘‘(16) the alternative fuel retail sales credit deter-
mined under section 40A(a).’’.
(c) TRANSITIONAL RULE.—Section 39(d) (relating to
transitional rules) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(11) NO CARRYBACK OF SECTION 40A CREDIT
BEFORE EFFECTIVE DATE.—No portion of the unused
business credit for any taxable year which is attrib-
utable to the alternative fuel retail sales credit deter-
mined under section 40A(a) may be carried back to
a taxable year ending before January 1, 2002.’’.
(d) CLERICAL AMENDMENT.—The table of sections for
subpart D of part IV of subchapter A of chapter 1 is amend-
ed by inserting after the item relating to section 40 the fol-
lowing new item:
‘‘Sec. 40A. Credit for retail sale of alternative fuels as motor vehicle fuel.’’.