Oklahoma Alternative Fuel Tax Incentives

DISCLAIMER

The information on this page should not be viewed as an official or legally binding document. Other requirements or exceptions may apply. For more detailed information, please consult a qualified tax representative and/or official Oklahoma Tax Commission publications.

Credit for qualified clean-burning motor vehicle fuel property

Prior to January 1, 2010, Oklahoma provides a one-time state income tax credit for 50% of the cost of converting a vehicle that is propelled by gasoline or diesel to compressed natural gas (CNG, liquefied natural gas (LNG), liquefied petroleum gas (LPG, also known as "propane"), or M-85 methanol. This credit also applies to the incremental cost of purchasing a new Original Equipment Manufacturer (OEM) vehicle that is propelled by CNG, LNG, LPG, or M-85 methanol. For the purposes of the clean-burning motor vehicle fuel property credit, "motor vehicle" includes forklifts and other similar self-propelled vehicles.

If the incremental OEM cost or the conversion cost of an alternative fuel vehicle (AFV) cannot be determined, the state will allow a capped tax credit of 10% of the total vehicle cost, or $1,500, whichever is less, as long as a tax credit has not been previously taken on the vehicle.

This tax credit does not extend to flexible fuel vehicles (vehicles capable of burning E85 ethanol). Additionally, this tax credit does not extend to any vehicles that have been converted to run on E85. See Oklahoma Income Tax Form 511CR (Credit for Conversion of Motor Vehicles to Clean Burning Fuel or Investments in Qualified Electric Motor Vehicle Property).

Credit for qualified electric vehicle property

Prior to January 1, 2010, Oklahoma provides a one-time state income tax credit for qualified OEM electric vehicles. The credit does not apply to vehicles known as "golf carts," "go-carts," or other motor vehicles which are manufactured principally for use off the streets and highways. (See Oklahoma Tax Commission Rule 710:50-15-81.)

For a qualified electric vehicle propelled by electricity only, the basis for the 50% credit is the full purchase price of the vehicle.

For vehicles also equipped with an internal combustion engine, such as a hybrid-electric vehicle, the basis for the credit is limited to the portion of the motor vehicle which is attributable to the propulsion of the vehicle by electricity.

If the portion of the vehicle attributable to electric propulsion cannot be determined, the state will allow a capped tax credit of 10% of the total vehicle cost, or $1,500, whichever is less, as long as a tax credit has not been previously taken on the vehicle.

(Reference 2008 Oklahoma Senate Bill 1558, amending Oklahoma Statutes Section 68-2357.22 and extending credit from January 1, 2009 to January 1, 2010.) See Oklahoma Income Tax Form 511CR.

Alternative Fuel Refueling Infrastructure Tax Credit

Prior to January 1, 2010, the state provides an income tax credit of up to 50% of the cost of equipment that is directly related to the delivery of M-85 methanol , compressed natural gas (CNG), liquefied natural gas (LNG), or liquefied petroleum gas (propane) into the fuel tank of a motor vehicle propelled by such fuel including compression equipment and storage tanks but only if the equipment is not used to deliver such fuel into any other type of storage tank or receptacle and such fuel is not used for any purpose other than to propel a motor vehicle.

This income tax credit may be carried forward for up to three years.

Electric vehicle charging equipment or charging infrastructure is not included in the fuels eligible for the refueling infrastructure tax credit.

Ethanol or E85 is not included in the fuels eligible for the refueling infrastructure tax credit.

(Reference 2008 Oklahoma Senate Bill 1558, amending Oklahoma Statutes Section 68-2357.22 and extending credit from January 1, 2009 to January 1, 2010.) See Oklahoma Income Tax Form 511CR.

Ethanol Motor Fuel Tax Credit

A retailer of ethanol-blended fuel (blended gasoline consisting of not more than 15% ethyl alcohol by volume) may claim a motor fuel tax credit of $0.016 for each gallon of ethanol-blended fuel sold in Oklahoma, if the retailer provides a price reduction to the purchaser of the ethanol fuel in the same amount. This incentive is effective unless the federal government mandates the use of reformulated fuel in an area within Oklahoma that is in non-attainment with the National Ambient Air Quality Standards. (Reference Oklahoma Statutes Section 68-500.10-1)

Biodiesel Production Tax Credit

Any biodiesel facility in production at the rate of at least 25% of its name plate design capacity for the production of biodiesel, on or before December 31, 2008, is eligible for a credit of twenty cents ($0.20) per gallon of biodiesel produced for the first 60 months provided the biodiesel facility maintains an average production rate of at least 25% of its name plate design capacity for at least six (6) months after the first month for which it is eligible to receive such credit. The credit of twenty cents ($0.20) per gallon of biodiesel produced expires for production after December 31, 2013.

Additional limitations and rules apply. (Reference Oklahoma Statutes Section 68-2357.67 and Oklahoma Tax Commission Rule 710:50-15-98.

Ethanol Production Tax Credit

Any ethanol facility in production at the rate of at least 25% of its name plate design capacity for the production of ethanol, on or before December 31, 2010 is eligible for a credit in the amount of twenty cents ($0.20) per gallon of ethanol produced for the first sixty (60) months provided the ethanol facility maintains an average production rate of at least 25% percent of its name plate design capacity for at least six (6) months after the first month for which it is eligible to receive such credit. The credit of twenty cents ($0.20) per gallon of ethanol produced expires for production after December 31, 2012.

Additional limitation and rules apply. (Reference Oklahoma Statutes Section 68-2357.66 and Oklahoma Tax Commission Rule 710:50-15-106.