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Energy-related tax incentives available for manufacturers in 2013

June 14, 2013

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The American Taxpayer Relief Act of 2012 (ATRA) has made significant tax savings available to businesses in the United States this year, including multiple credits for converting vehicles to natural gas power and subsidies for the use of biofuels. In addition, ATRA offers a variety of other energy-related incentives that can help manufacturers and distributors.

Regular, midgrade or . . . natural gas?

Even though it might have been unthinkable just a decade ago, the current spike in natural gas production in the United States — and the lower prices that the boom has brought — means that the fuel source may soon be powering more than residential furnaces, dryers and stoves. Food for thought? FedEx CEO Frederick W. Smith recently announced that the overnight delivery giant expects that 30% of its massive fleet will be natural gas powered by 2023.

Congress is making sure the infrastructure is in place to support these new green vehicles. ATRA includes tax credits of up to $30,000 for manufacturers and other U.S. businesses to install natural gas refueling equipment on their property. This tax incentive, which is capped at 30% of the investment, applies to equipment that’s in use before Jan. 1, 2014.

Biodiesel credits live on

While natural gas–powered trucks and automobiles lining up on America’s highways may seem like a distant reality, biodiesel and other renewable fuels made from soybeans and corn have been in production in the United States for years. The U.S. Department of Energy estimates that there are hundreds of biodiesel pumps across the United States.

ATRA extended for one year credits for the commercial use of biofuels, biodiesel and other renewable fuels that can be used in your delivery trucks and other fleet vehicles. The biodiesel credit, which had lapsed at the end of 2011, provides a $1 per gallon subsidy that makes it economically viable to create an estimated 300 million gallons of the alternative fuel each year, as well as nearly 20,000 jobs, according to a recent study by the consulting firm Cardno ENTRIX.

Other breaks

Manufacturers now have until the end of the year to claim tax credits for two- and three-wheeled plug-in electric vehicles, as well as for converting their electrical use to wind power. To qualify for the wind power production tax credit, companies must start wind turbine construction before Jan. 1, 2014. Once in service, wind energy users may then qualify for a 10-year tax credit of 2.2 cents per kilowatt hour.

Congress also extended an enhanced depreciation deduction for producers of certain biofuels, as well as manufacturers of energy-efficient appliances.

Does your company qualify?

Your manufacturing or distribution operation may be able to take advantage of new (or renewed) energy tax incentives, but you generally must take action before year end. To see if your business can qualify, check with your tax advisor.

For more information contact Dennis McLaughlin at [email protected]

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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