Economic Benefits

Purchasers of natural gas vehicles benefit from tax incentives, longer engine life and lower maintenance costs.

Tax Incentives

In an effort to reduce America’s dependence on foreign oil and reduce greenhouse gas emissions, the federal government, state governments and even local governments have implemented incentives to encourage the purchase and use of NGVs. These incentives include tax deductions/credits, reduced license fees, reduced vehicle sales taxes, and lower registration fees.

The federal NGV tax incentives are summarized below.  State incentives are constantly changing as some programs expire and new ones are created. For information on incentives for a specific state, contact that state’s energy office.

Home vehicle refueling appliances and public station refueling equipment

• income tax credit up to 30% of the cost, not to exceed $30,000, for large station equipment placed into service after December 31, 2005, and before January 1, 2009
• income tax credit up to 50% of the cost, not to exceed $50,000, for large stations placed into service on or after January 1, 2009
• income tax credit up to $1,000 for home refueling appliances placed into service after December 31, 2005, and before January 1, 2009
• income tax credit up to $2,000 for home refueling appliances placed into service after January 1, 2009
• credits expire December 31, 2010

New NGVs that operate 100 percent on compressed natural gas (CNG)

• income tax credit for the purchase of a new, dedicated NGV of 50% of the cost difference between a natural gas vehicle and a gasoline powered model
• a tax credit for an additional 30% if the vehicle meets certain tighter emission standards
• credit amount would range from $2,500 to $32,000 depending on the size (gross vehicle weight) of the vehicle
• credit is effective on purchases after December 31, 2005, and expires December 31, 2010
• Honda Civic GX NGV models eligible for federal tax credit
  • 2007 Honda Civic GX - $4,000
  • 2008 Honda Civic GX - $4,000
  • 2009 Honda Civic GX - $4,000

Maintenance Costs

Gasoline and diesel engine lives are shortened because of the build-up of carbon.  Natural gas engines, on the other hand, have virtually no carbon build-up, so ring wear is reduced and engine life is extended.

Tune-ups and oil changes for natural gas vehicles aren’t needed as frequently because compressed natural gas burns so much cleaner than gasoline or diesel.  Some natural gas vehicle owners report service lives two to three years longer than gasoline or diesel vehicles.