weight rating, the most stringent standard available 
shall be such standard available for certification in 
2002. 
‘‘(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 sug-
gested 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 ex-
ceed—
‘‘(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 
vehicle weight rating of more than 8,500 
pounds but not more than 14,000 pounds, 
‘‘(C) $25,000, if such vehicle has a gross 
vehicle weight rating of more than 14,000 
pounds but not more than 26,000 pounds, and 
‘‘(D) $40,000, if such vehicle has a gross 
vehicle weight rating of more than 26,000 
pounds.
‘‘(4) NEW
QUALIFIED
ALTERNATIVE
FUEL 
MOTOR
VEHICLE.—For purposes of this sub-
section—
‘‘(A) IN GENERAL.—The term ‘new quali-
fied alternative fuel motor vehicle’ means any 
motor vehicle—
‘‘(i) which is only capable of operating 
on an alternative fuel, 
‘‘(ii) the original use of which com-
mences with the taxpayer, 
‘‘(iii) which is acquired by the tax-
payer for use or lease, but not for resale, 
and 
‘‘(iv) which is made by a manufac-
turer. 
‘‘(B) ALTERNATIVE FUEL.—The term ‘al-
ternative fuel’ means compressed natural gas, 
liquefied natural gas, liquefied petroleum gas, 
hydrogen, and any liquid at least 85 percent of 
the volume of which consists of methanol or 
ethanol. 
‘‘(5) CREDIT FOR MIXED-FUEL VEHICLES.—
‘‘(A) IN
GENERAL.—In the case of a 
mixed-fuel vehicle placed in service by the tax-
payer during the taxable year, the credit deter-
mined 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 sub-
section if such vehicle was a qualified alter-
native 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 sub-
section if such vehicle was a qualified alter-
native fuel motor vehicle. 
‘‘(B) MIXED-FUEL
VEHICLE.—For pur-
poses of this subsection, the term ‘mixed-fuel 
vehicle’ means any motor vehicle described in 
subparagraph (C) or (D) of paragraph (3), 
which—
‘‘(i) is certified by the manufacturer 
as being able to perform efficiently in nor-
mal operation on a combination of an al-
ternative fuel and a petroleum-based fuel, 
‘‘(ii) either—
‘‘(I) has received a certificate of 
conformity under the Clean Air Act, 
or
‘‘(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 manufac-
turer. 
‘‘(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-
native fuel and not more than 10 percent petro-
leum-based fuel. 
‘‘(e) NEW QUALIFIED ADVANCED DIESEL MOTOR 
VEHICLE CREDIT.—
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the new qualified advanced diesel motor vehicle 
credit determined under this subsection with respect 
to a new qualified advanced diesel motor vehicle 
placed in service by the taxpayer during the taxable 
year is—
‘‘(A) $3,000 for vehicles with a gross vehi-
cle weight rating of not more than 14,000 
pounds, placed in service before December 31, 
2009, if such vehicle 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 Environ-
mental Protection Agency under section 202(i) 
of the Clean Air Act for that make and model 
year, 
‘‘(B) $5,000 for vehicles with a gross vehi-
cle weight rating of not more than 14,000 
pounds, placed in service before December 31, 
2013, if such vehicle has received a certificate 
that such vehicle meets or exceeds the Ultra
Low Emission Vehicle II (ULEV II) emission 
level established in regulations prescribed by the 
California Air Resources Board under chapter 1 
of division 3 of title 13, California Code of Reg-
ulations, for that make and model year, and 
‘‘(C) zero in any other case. 
‘‘(2) DEFINITIONS.—
‘‘(A) VEHICLE INERTIA WEIGHT CLASS.—
For purposes of this subsection, the term ‘vehi-
cle inertia weight class’ has the same meaning 
as when defined in regulations prescribed by 
the Administrator of the Environmental Protec-
tion Agency for purposes of the administration 
of title II of the Clean Air Act (42 U.S.C. 7521 
et seq.). 
‘‘(B) NEW QUALIFIED ADVANCED DIESEL 
MOTOR
VEHICLE.—For purposes of this sub-
section, the term ‘new qualified advanced diesel 
motor vehicle’ means any motor vehicle—
‘‘(i) with a direct-injection diesel en-
gine which achieves at least 20% increased 
fuel efficiency over the comparably sized 
gasoline engine, as determined by the Sec-
retary,
‘‘(ii) the original use of which com-
mences with the taxpayer, 
‘‘(iii) which is acquired for use or 
lease by the taxpayer and not for resale, 
and 
‘‘(iv) which is made by a manufac-
turer. 
‘‘(f) 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 re-
duced by the sum of the credits allowable under sub-
part A and sections 27, 29, and 30, over 
‘‘(2) the tentative minimum tax for the taxable 
year. 
‘‘(g) 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 vehi-
cle’ 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 sec-
tion. 
‘‘(4) OTHER TERMS.—The terms ‘automobile’, 
‘passenger automobile’, ‘medium duty passenger ve-
hicle’, ‘light truck’, and ‘manufacturer’ have the 
meanings given such terms in regulations prescribed 
by the Administrator of the Environmental Protec-
tion Agency for purposes of the administration 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 re-
duced by the amount of such credit so allowed (de-
termined 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 
account in computing the amount of the credit 
determined under subsection (d) shall be re-
duced 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. 
‘‘(7) PROPERTY USED BY TAX-EXEMPT ENTI-
TIES.—In the case of a credit amount which is al-
lowable with respect to a motor vehicle which is ac-
quired 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 specific amount of 
any credit otherwise allowable to the entity under 
this section. 
‘‘(8) RECAPTURE.—The Secretary shall, by reg-
ulations, 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 vehi-
cle). 
‘‘(9) 
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. 
‘‘(10) 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. 
‘‘(11) CARRYBACK
AND
CARRYFORWARD
AL-
LOWED.—
‘‘(A) IN GENERAL.—If the credit amount 
allowable under subsection (a) for a taxable 
year exceeds the amount of the limitation under 
subsection (e) for such taxable year (in this 
paragraph referred to as the ‘unused credit 
year’), such excess shall be allowed as a credit 
carryback for each of the 3 taxable years begin-
ning after the date of the enactment of this sec-
tion, 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 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. 
‘‘(h) REGULATIONS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the Secretary shall promulgate such regu-
lations as necessary to carry out the provisions of 
this section.
‘‘(2) COORDINATION IN PRESCRIPTION OF CER-
TAIN REGULATIONS.—The Secretary of the Treas-
ury, in coordination with the Secretary of Transpor-
tation and the Administrator of the Environmental 
Protection Agency, shall prescribe such regulations 
as necessary to determine whether a motor vehicle 
meets the requirements to be eligible for a credit 
under this section. 
‘‘(i) TERMINATION.—This section shall not apply to 
any property purchased after—
‘‘(1) in the case of a new qualified fuel cell 
motor vehicle (as described in subsection (b)), De-
cember 31, 2013, 
‘‘(2) in the case of a new qualified advanced 
diesel motor vehicle to which subsection (e)(1)(B) 
applies, December 31, 2013, and 
‘‘(3) in the case of any other property, Decem-
ber 31, 2009.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 1016(a) is amended by striking 
‘‘and’’ at the end of paragraph (30), by striking the 
period at the end of paragraph (31) and inserting ‘‘, 
and’’, and by adding at the end the following new 
paragraph:
‘‘(32) to the extent provided in section 
30B(g)(5).’’. 
(2) Section 55(c)(3) is amended by inserting 
‘‘30B(f),’’ after ‘‘30(b)(3)’’. 
(3) Section 6501(m) is amended by inserting 
‘‘30B(g)(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 in-
serting after the item relating to section 30A the fol-
lowing new item:
‘‘Sec. 30B. Alternative 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 
ending after such date. 
SEC. 315. MODIFICATION OF CREDIT FOR QUALIFIED ELEC-
TRIC VEHICLES. 
(a) AMOUNT OF CREDIT.—
(1) IN GENERAL.—Section 30(a) (relating to al-
lowance of credit) is amended by striking ‘‘10 per-
cent of’’. 
(2) LIMITATION
OF
CREDIT
ACCORDING
TO 
TYPE OF VEHICLE.—Section 30(b) (relating to limi-
tations) is amended—
(A) by striking paragraphs (1) and (2) and 
inserting the following new paragraph: