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Federal Clean Diesel Tax Credit

Clean diesel cars, pickups and SUVs purchased between January 1, 2006 and December 31, 2010 are eligible for a new federal tax credit. To qualify, new diesel vehicles must:

• Be powered by an internal combustion engine which:
• Designed to operate primarily using more air than is necessary for complete combustion of the fuel
• Incorporates direct injection
• Achieves a minimum 25% increase in city fuel economy compared to a similar 2002 vehicle (inertia weight class)
• Vehicle weighing 6000 pounds or less must meet Tier 2 Bin 5 emissions
• Vehicle weighing more than 6000 pounds but not more than 8500 pounds must meet Tier 2 Bin 8 emissions  

The credit amount for passenger cars and light duty trucks ranges from $250 up to $3400 depending on achieving certain performance standards for improved fuel economy and fuel conservation (gallons saved) over the life of the vehicle.

• Fuel economy credit can range from $400 to $2400 with a minimum threshold of a 25% improvement as compared to 2002 model year city fuel economy (based on vehicle inertia weight class – see below)  
• Conservation credit can range from $250 - $1000 dollars with a minimum threshold of at least 1200 gallons of gasoline saved over the life of a vehicle driven 120,000 miles.    

Phase-out period  

Each automotive manufacturer is limited to selling 60,000 vehicles (hybrid or diesel) that qualify for the advanced vehicle credit.  In the first calendar quarter following the sale of the 60,000th qualifying vehicle, a phase-out period begins.  The applicable percentage of the incentive during the phase out period is as follows:

• 50% for the first 2 calendar quarters of the phase-out period.
• 25% for the 3rd and 4th calendar quarters of the phase-out period, and
• 0% thereafter  

Credit Amount for Passenger Cars and Light Duty Trucks

Fuel Economy Credit

Conservation Credit

Baseline Fuel Economy Levels

Light Trucks