24-month period beginning on the date that such ex-
pense was paid or incurred. 
‘‘(2) SPECIAL
RULES.—For purposes of this 
subsection, rules similar to the rules of paragraphs 
(2), (3), and (4) of subsection (h) shall apply.’’. 
(b) CONFORMING AMENDMENT.—Section 263A(c)(3) 
is amended by inserting ‘‘167(h), 167(i),’’ after ‘‘under 
section’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after the date of the enactment of 
this Act. 
SEC. 206. ADVANCED LEAN BURN TECHNOLOGY MOTOR VE-
HICLE CREDIT. 
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 (relating to other credits) is 
amended by adding at the end the following: 
‘‘SEC. 30B. ADVANCED LEAN BURN TECHNOLOGY MOTOR 
VEHICLE CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the sum of the 
credit amounts determined under subsection (b) with re-
spect to each qualified advanced lean burn technology
motor vehicle placed in service by the taxpayer during the 
taxable year. 
‘‘(b) CREDIT AMOUNT.—For purposes of subsection 
(a)—
‘‘(1) FUEL
EFFICIENCY.—The credit amount 
with respect to any vehicle shall be—
‘‘(A) $500, if the city fuel economy of such 
vehicle is at least 125 percent but less than 150 
percent of the 2000 model year city fuel econ-
omy for a vehicle in the same inertia weight 
class, 
‘‘(B) $1,000, if the city fuel economy of 
such vehicle is at least 150 percent but less 
than 175 percent of the 2000 model year city 
fuel economy for a vehicle in the same inertia 
weight class, 
‘‘(C) $1,500, if the city fuel economy of 
such vehicle is at least 175 percent but less 
than 200 percent of the 2000 model year city 
fuel economy for a vehicle in the same inertia 
weight class, 
‘‘(D) $2,000, if the city fuel economy of 
such vehicle is at least 200 percent but less 
than 225 percent of the 2000 model year city
fuel economy for a vehicle in the same inertia 
weight class, 
‘‘(E) $2,500, if the city fuel economy of 
such vehicle is at least 225 percent but less 
than 250 percent of the 2000 model year city 
fuel economy for a vehicle in the same inertia 
weight class, and 
‘‘(F) $3,000, if the city fuel economy of 
such vehicle is at least 250 percent of the 2000 
model year city fuel economy for a vehicle in 
the same inertia weight class. 
‘‘(2) CONSERVATION.—The credit amount de-
termined under paragraph (1) with respect to any 
vehicle shall be increased by—
‘‘(A) $250, if the lifetime fuel savings of 
such vehicle is at least 1,500 gallons of motor 
fuel but less than 2,500 gallons of motor fuel, 
and 
‘‘(B) $500, if the lifetime fuel savings of 
such vehicle is at least 2,500 gallons of motor 
fuel. 
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—The 
credit allowed under subsection (a) for the taxable year 
shall not exceed the excess of—
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over 
‘‘(2) the sum of the credits allowable under sub-
part A and sections 27 and 30A for the taxable 
year. 
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED ADVANCED LEAN BURN TECH-
NOLOGY MOTOR VEHICLE.—The term ‘qualified ad-
vanced lean burn technology motor vehicle’ means a 
motor vehicle—
‘‘(A) the original use of which commences 
with the taxpayer, 
‘‘(B) powered by an internal combustion 
engine that—
‘‘(i) is designed to operate primarily 
using more air than is necessary for com-
plete combustion of the fuel, and 
‘‘(ii) incorporates direct injection, 
‘‘(C) that only uses diesel fuel (as defined 
in section 4083(a)(3)), 
‘‘(D) the city fuel economy of which is at 
least 125 percent of the 2000 model year city 
fuel economy for a vehicle in the same inertia 
weight class, and
‘‘(E) that has received a certificate that 
such vehicle meets or exceeds the Bin 8 Tier II 
emission level established in regulations pre-
scribed by the Administrator of the Environ-
mental Protection Agency under section 202(i) 
of the Clean Air Act. 
‘‘(2) LIFETIME FUEL SAVINGS.—The term ‘life-
time fuel savings’ means, with respect to a qualified 
advanced lean burn technology motor vehicle, an 
amount equal to the excess (if any) of—
‘‘(A) 120,000 divided by the 2000 model 
year city fuel economy for the vehicle inertia 
weight class, over 
‘‘(B) 120,000 divided by the city fuel econ-
omy for such vehicle. 
‘‘(3) 2000 MODEL
YEAR
CITY
FUEL
ECON-
OMY.—The 2000 model year city fuel economy with 
respect to a vehicle shall be determined in accord-
ance with the following tables: 
‘‘(A) In the case of a passenger auto-
mobile:
‘‘If 
vehicle 
inertia 
weight 
class is: 
The 2000 model year city fuel 
economy is: 
1,500 or 1,750 lbs ....................................................................
43.7 mpg
2,000 lbs ..................................................................................
38.3 mpg
2,250 lbs ..................................................................................
34.1 mpg
2,500 lbs ..................................................................................
30.7 mpg
2,750 lbs ..................................................................................
27.9 mpg
3,000 lbs ..................................................................................
25.6 mpg
3,500 lbs ..................................................................................
22.0 mpg
‘‘If 
vehicle 
inertia 
weight 
class is: 
The 2000 model year city fuel 
economy is: 
4,000 lbs ..................................................................................
19.3 mpg
4,500 lbs ..................................................................................
17.2 mpg
5,000 lbs ..................................................................................
15.5 mpg
5,500 lbs ..................................................................................
14.1 mpg
6,000 lbs ..................................................................................
12.9 mpg
6,500 lbs ..................................................................................
11.9 mpg
7,000 or 8,500 lbs ....................................................................
11.1 mpg.
‘‘(B) In the case of a light truck:
‘‘If 
vehicle 
inertia 
weight 
class is: 
The 2000 model year city fuel 
economy is: 
1,500 or 1,750 lbs ....................................................................
37.6 mpg
2,000 lbs ..................................................................................
33.7 mpg
2,250 lbs ..................................................................................
30.6 mpg
2,500 lbs ..................................................................................
28.0 mpg
2,750 lbs ..................................................................................
25.9 mpg
3,000 lbs ..................................................................................
24.1 mpg
3,500 lbs ..................................................................................
21.3 mpg
4,000 lbs ..................................................................................
19.0 mpg
4,500 lbs ..................................................................................
17.3 mpg
5,000 lbs ..................................................................................
15.8 mpg
5,500 lbs ..................................................................................
14.6 mpg
6,000 lbs ..................................................................................
13.6 mpg
6,500 lbs ..................................................................................
12.8 mpg
7,000 or 8,500 lbs ....................................................................
12.0 mpg.
‘‘(4) MOTOR VEHICLE.—The term ‘motor vehi-
cle’ has the meaning given such term by section 
30(c)(2). 
‘‘(5) CITY FUEL ECONOMY.—City fuel economy 
with respect to any vehicle shall be measured in ac-
cordance with testing and calculation procedures es-
tablished by the Administrator of the Environmental 
Protection Agency by regulations in effect on April 
11, 2005. 
‘‘(6) OTHER
TERMS.—The terms ‘passenger 
automobile’, ‘light truck’, and ‘manufacturer’ shall 
have the meanings given such terms in regulations
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.). 
‘‘(e) CARRYFORWARD ALLOWED.—
‘‘(1) IN GENERAL.—If the credit amount allow-
able under subsection (a) for a taxable year exceeds 
the amount of the limitation under subsection (c) for 
such taxable year (referred to as the ‘unused credit 
year’ in this paragraph), such excess shall be allowed 
as a credit carryforward for each of the 20 taxable 
years following the unused credit year. 
‘‘(2) RULES.—Rules similar to the rules of sec-
tion 39 shall apply with respect to the credit 
carryforward under paragraph (1). 
‘‘(f) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) REDUCTION IN BASIS.—The basis of any 
property for which a credit is allowable under sub-
section (a) shall be reduced by the amount of such 
credit (determined without regard to subsection (c)). 
‘‘(2) NO
DOUBLE
BENEFIT.—The amount of 
any deduction or credit allowable under this chapter 
(other than the credit allowable under subsection 
(a)), with respect to any vehicle shall be reduced by
the amount of credit allowed under subsection (a) 
(determined without regard to subsection (c)) for 
such vehicle for the taxable year. 
‘‘(3) PROPERTY USED BY TAX-EXEMPT ENTI-
TY.—In the case of a vehicle whose use is described 
in paragraph (3) or (4) of section 50(b) and which 
is not subject to a lease, the person who sold such 
vehicle to the person or entity using such vehicle 
shall be treated as the taxpayer that placed such ve-
hicle in service, but only if such person clearly dis-
closes to such person or entity in a document the 
amount of any credit allowable under subsection (a) 
with respect to such vehicle (determined without re-
gard to subsection (c)). 
‘‘(4) 
PROPERTY
USED
OUTSIDE
UNITED 
STATES, ETC., NOT QUALIFIED.—No credit shall be 
allowable under subsection (a) with respect to any 
property referred to in section 50(b)(1) or with re-
spect to the portion of the cost of any property 
taken into account under section 179. 
‘‘(5) ELECTION
NOT
TO
TAKE
CREDIT.—No 
credit shall be allowed under subsection (a) for any 
vehicle if the taxpayer elects not to have this section 
apply to such vehicle.
‘‘(6) INTERACTION
WITH
AIR
QUALITY
AND 
MOTOR VEHICLE SAFETY STANDARDS.—Unless oth-
erwise 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—
‘‘(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.—The Secretary shall pro-
mulgate such regulations as necessary to carry out 
this section, including regulations to prevent the 
avoidance of the purposes of this section through 
disposal of any motor vehicle or leasing of any motor 
vehicle for a lease period of less than the economic 
life of such vehicle. 
‘‘(2) DETERMINATION OF MOTOR VEHICLE ELI-
GIBILITY.—The Secretary, in coordination with the 
Secretary of Transportation and the Administrator
of the Environmental Protection Agency, shall pre-
scribe such regulations as necessary to determine 
whether a motor vehicle meets the requirements to 
be eligible for a credit under this section. 
‘‘(h) TERMINATION.—This section shall not apply to 
any property placed in service after December 31, 2007.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 1016(a), as amended by section 201 
of this Act, is amended by striking ‘‘and’’ at the end 
of paragraph (31), by striking the period at the end 
of paragraph (32) and inserting ‘‘, and’’, and by 
adding at the end the following: 
‘‘(33) to the extent provided in section 
30B(f)(1).’’. 
(2) Section 6501(m) is amended by inserting 
‘‘30B(f)(6),’’ after ‘‘30(d)(4),’’. 
(3) The table of sections for subpart B of part 
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 30A the fol-
lowing:
‘‘Sec. 30B. Advanced lean burn technology motor vehicle credit.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act in taxable years end-
ing after such date.
SEC. 207. CREDIT FOR ENERGY EFFICIENCY IMPROVE-
MENTS TO EXISTING HOMES. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 (relating to nonrefundable personal 
credits), as amended by section 201, is amended by insert-
ing after section 25C the following new section: 
‘‘SEC. 25D. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST-
ING HOMES. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount 
equal to 20 percent of the amount paid or incurred by 
the taxpayer for qualified energy efficiency improvements 
installed during such taxable year. 
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM CREDIT.—The credit allowed by 
this section with respect to a dwelling unit shall not 
exceed $2,000. 
‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER 
ON SAME DWELLING TAKEN INTO ACCOUNT.—If a 
credit was allowed to the taxpayer under subsection 
(a) with respect to a dwelling unit in 1 or more prior 
taxable years, the amount of the credit otherwise al-
lowable for the taxable year with respect to that 
dwelling unit shall be reduced by the sum of the 
credits allowed under subsection (a) to the taxpayer
with respect to the dwelling unit for all prior taxable 
years. 
‘‘(c) QUALIFIED ENERGY EFFICIENCY IMPROVE-
MENTS.—For purposes of this section, the term ‘qualified 
energy efficiency improvements’ means any energy effi-
cient building envelope component which meets the pre-
scriptive criteria for such component established by the 
2000 International Energy Conservation Code, as such 
Code (including supplements) is in effect on the date of 
the enactment of this section (or, in the case of a metal 
roof with appropriate pigmented coatings which meet the 
Energy Star program requirements), if—
‘‘(1) such component is installed in or on a 
dwelling unit located in the United States and 
owned and used by the taxpayer as the taxpayer’s 
principal residence (within the meaning of section 
121), 
‘‘(2) the original use of such component com-
mences with the taxpayer, and 
‘‘(3) such component reasonably can be ex-
pected to remain in use for at least 5 years. 
If the aggregate cost of such components with respect to 
any dwelling unit exceeds $1,000, such components shall 
be treated as qualified energy efficiency improvements
only if such components are also certified in accordance 
with subsection (d) as meeting such prescriptive criteria. 
‘‘(d) CERTIFICATION.—The certification described in 
subsection (c) shall be—
‘‘(1) determined on the basis of the technical 
specifications or applicable ratings (including prod-
uct labeling requirements) for the measurement of 
energy efficiency (based upon energy use or building 
envelope component performance) for the energy ef-
ficient building envelope component, 
‘‘(2) provided by a local building regulatory au-
thority, a utility, a manufactured home production 
inspection primary inspection agency (IPIA), or an 
accredited home energy rating system provider who 
is accredited by or otherwise authorized to use ap-
proved energy performance measurement methods by 
the 
Residential 
Energy 
Services 
Network 
(RESNET), and 
‘‘(3) made in writing in a manner which speci-
fies in readily verifiable fashion the energy efficient 
building envelope components installed and their re-
spective energy efficiency levels. 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) BUILDING ENVELOPE COMPONENT.—The 
term ‘building envelope component’ means—
‘‘(A) any insulation material or system 
which is specifically and primarily designed to 
reduce the heat loss or gain of a dwelling unit 
when installed in or on such dwelling unit, 
‘‘(B) exterior windows (including sky-
lights), 
‘‘(C) exterior doors, and 
‘‘(D) any metal roof installed on a dwelling 
unit, but only if such roof has appropriate pig-
mented coatings which are specifically and pri-
marily designed to reduce the heat gain of such 
dwelling unit. 
‘‘(2) MANUFACTURED HOMES INCLUDED.—The 
term ‘dwelling unit’ includes a manufactured home 
which conforms to Federal Manufactured Home 
Construction and Safety Standards (section 3280 of 
title 24, Code of Federal Regulations). 
‘‘(3) APPLICATION OF RULES.—Rules similar to 
the rules under paragraphs (3), (4), and (5) of sec-
tion 25C(d) shall apply. 
‘‘(f) BASIS ADJUSTMENT.—For purposes of this sub-
title, if a credit is allowed under this section for any ex-
penditure with respect to any property, the increase in the
basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by 
the amount of the credit so allowed. 
‘‘(g) APPLICATION OF SECTION.—This section shall 
apply to qualified energy efficiency improvements installed 
after the date of the enactment of this section, and before 
January 1, 2008.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 1016, as amended 
by section 206 of this Act, is amended by striking 
‘‘and’’ at the end of paragraph (32), by striking the 
period at the end of paragraph (33) and inserting ‘‘, 
and’’, and by adding at the end the following new 
paragraph: 
‘‘(34) to the extent provided in section 25D(f), 
in the case of amounts with respect to which a credit 
has been allowed under section 25D.’’. 
(2) The table of sections for subpart A of part 
IV of subchapter A of chapter 1, as amended by sec-
tion 201, is amended by inserting after the item re-
lating to section 25C the following new item:
‘‘Sec. 25D. Energy efficiency improvements to existing homes.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to improvements installed after the 
date of the enactment of this Act in taxable years ending 
after such date.
TITLE III—ALTERNATIVE 
MINIMUM TAX RELIEF 
SEC. 301. NEW NONREFUNDABLE PERSONAL CREDITS AL-
LOWED AGAINST REGULAR AND MINIMUM 
TAXES. 
(a) IN GENERAL.—
(1) SECTION 25C.—Section 25C(b), as added by 
section 201 of this Act, is amended by adding at the 
end the following new paragraph: 
‘‘(3) LIMITATION
BASED
ON
AMOUNT
OF 
TAX.—The credit allowed under subsection (a) for 
the taxable year shall not exceed the excess of—
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this subpart (other than this section) and 
section 27 for the taxable year.’’. 
(2) SECTION 25D.—Section 25D(b), as added 
by section 207 of this Act, is amended by adding at 
the end the following new paragraph: 
‘‘(3) LIMITATION
BASED
ON
AMOUNT
OF 
TAX.—The credit allowed under subsection (a) for 
the taxable year shall not exceed the excess of—
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this subpart (other than this section) and 
section 27 for the taxable year.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 23(b)(4)(B) is amended by inserting 
‘‘and sections 25C and 25D’’ after ‘‘this section’’. 
(2) Section 24(b)(3)(B) is amended by striking 
‘‘and 25B’’ and inserting ‘‘, 25B, 25C, and 25D’’. 
(3) Section 25(e)(1)(C) is amended by inserting 
‘‘25C, and 25D’’ after ‘‘25B,’’. 
(4) Section 25B(g)(2) is amended by striking 
‘‘section 23’’ and inserting ‘‘sections 23, 25C, and 
25D’’. 
(5) Section 26(a)(1) is amended by striking 
‘‘and 25B’’ and inserting ‘‘25B, 25C, and 25D’’. 
(6) Section 904(h) is amended by striking ‘‘and 
25B’’ and inserting ‘‘25B, 25C, and 25D’’. 
(7) Section 1400C(d) is amended by striking 
‘‘and 25B’’ and inserting ‘‘25B, 25C, and 25D’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2005.
SEC. 302. CERTAIN BUSINESS ENERGY CREDITS ALLOWED 
AGAINST REGULAR AND MINIMUM TAXES. 
(a) IN GENERAL.—Subparagraph (B) of section 
38(c)(4) (relating to specified credits) is amended by re-
designating clause (ii) as clause (iv) and by striking clause 
(i) and inserting the following new clauses: 
‘‘(i) the credits determined under sec-
tions 40, 45H, and 45I, 
‘‘(ii) so much of the credit determined 
under section 46 as is attributable to sec-
tion 48(a)(3)(A)(iii), 
‘‘(iii) for taxable years beginning after 
December 31, 2005, and before January 1, 
2008, the credit determined under section 
43, and’’. 
(b) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided by para-
graph (2), the amendment made by subsection (a) 
shall apply to credits determined under the Internal 
Revenue Code of 1986 for taxable years beginning 
after December 31, 2005. 
(2) FUEL
CELLS.—Clause (ii) of section 
38(c)(4)(B) of the Internal Revenue Code of 1986, 
as amended by subsection (a) of this section, shall 
apply to credits determined under the Internal Rev-