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Tax Incentives
Another possible, though infrequently used, incentive to promote investment in diesel emissions reduction equipment has been the creation of state tax incentives. They can take the form of exemptions, deductions or credits. In 2000, the state of Oregon created a tax credit to help compensate for the cost of installing pollution control devices on EPA’s verified technology list. The provision provides a maximum 35 percent credit against Oregon income taxes (rates may be less for equipment not used exclusively in Oregon). The credit is intended to cover expenditures for the cost of the retrofit, including the equipment and installation costs. In the state of Georgia, income tax credits can be taken for up to 10 percent of the cost of emissions control technology upgrades.
Tax incentives are not contingent upon funding levels; therefore firms do not face the same degree of competition as they do when applying for limited amounts of grant funding. Nevertheless, they are often insufficient to meet the incremental cost of installing emissions control technology and can be of limited value to companies that make little profit and thus have little tax liability.
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