As Hydrogen Tax Credits End, Gas-Guzzling SUV Tax Credits Are Back for Businesses

It was a well-known deduction added to the U.S. Federal Tax Code back when President George W. Bush was still in the White House, and one which even earned itself a mention in Chris Paine’s seminal documentary Who Killed The Electric Car? 

Large pickup trucks will yet-again be eligible for full tax write-off against a business' Federal Taxes.

Large pickup trucks will yet-again be eligible for full tax write-off against a business’ Federal Taxes.

It allowed businesses and sole traders the ability to write-off the cost of purchasing vehicles over 6,000 pounds against their annual tax bill to the tune of more than $500,000 per year, even if the vehicle was only ever driven by one person.

Last year that tax credit was was cut from $500,000 to just $25,000 by the current administration — we presume in the interests of fiscal responsibility and environmentalism — but as our friends over at GreenCarReports note, the recent budget bill signed into law earlier this month by President Obama has not only restored the previous $500,000 “gas guzzler tax deduction” for next year, but has cut all tax credits for hydrogen fuel cell vehicles.

Previous Federal tax credits for electric vehicle purchases, electric car charging stations and compressed natural gas refuelling stations remain.

Originally added to the U.S. Federal Tax Code by the previous administration, the particular Federal Tax Code in question — Section 179 — allowed  businesses to deduct the cost of large capital purchases as a business expense rather than requiring them to amortize the costs over a number of years. Designed to help farmers and other businesses like construction companies buy heavy plant machinery, a loophole in the law made it possible for any vehicle over 6,000 pounds in weight to qualify for the deduction.

With fuel prices dropping, expect a rise in full-size pickup sales again.

With fuel prices dropping, expect a rise in full-size pickup sales again.

With many full-size pickup trucks and SUVs topping the scales at over 6,000 pounds — including the no-longer sold full-size Hummer SUV — many small businesses and sole traders were able to essentially buy a brand-new, low-mpg vehicle for business purposes, writing off the capital expenditure against their business taxes.

Last year, increasing gas prices and the lower $25,000 maximum deductible under Section 179 more than certainly put many small business off buying a gas-guzzling SUV or pickup truck.

But now the maximum deductible is back to $500,000 — and gas is heading back under $3 a gallon in some places — we’re sure there will be a marked increase in new full-size pickup and SUV sales. It’s worth noting too that since many full-size pickups are qualified as ‘heavy duty’ vehicles, they do not have to follow the same tough EPA regulations as ‘light duty’ and passenger vehicles.

Bad news for Toyota: there won't be any Federal Tax Credits for hydrogen fuel cell cars next year.

Bad news for Toyota: there won’t be any Federal Tax Credits for hydrogen fuel cell cars next year.

As to hydrogen fuel cell vehicles? With all incentives gone, Toyota, Hyundai and Honda — all of which are backing hydrogen as their preferred zero emissions fuel of the future — may be forced to rethink their sales and leasing plans for the U.S.

We’re not financial advisors. And we’re not tax advisors. Nothing in this article should be taken as tax advice, and you should always consult a licensed tax consultant before making any purchase decisions.

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  • Espen Hugaas Andersen

    Which hydrogen tax credits have been discontinued? Am I understanding this correctly that you can still get a $7500 federal tax credit when buying an EV, but you get nothing when buying a FCV?

    • Erocker

      I think that is correct. On the Federal side.

  • D. Harrower

    I’m going to take a wild guess and wager that it was the GOP that lobbied for this bill…?

    • Kenneth_Brown

      Well, Director Obama signed it into law, so party finger pointing is not appropriate (as usual).

  • Matt Beard

    Hmm, now we just need Tesla to launch the Model S-Heavy with 1400lbs of lead bolted to the underside (that can be removed after purchase :wink:)

    • I prefer lithium to lead u2026 a dual-stackable pack is a pratical option for city/highway use. With air suspention, can adjust ride height based on amount of battery.

  • Surya

    Tesla should be smart and offer a Model S with 2000 pounds of extra lead in the trunk, just to be eligible for this incentive!

  • Kenneth_Brown

    Petrol has dropped in price for 6 weeks and the sheeple are out buying gas guzzlers again? Amazing. When the price goes back up and there are still 5 1/2 years of payments remaining, there will be problems for some people.