Advanced Lean-Burn Technology Vehicle Credits

• Posted on September 27, 2010
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2010 is the final year for the advanced lean-burn technology motor vehicle tax credit. Advanced lean-burn technology vehicles are passenger cars or light trucks with an internal combustion engine designed to operate primarily using more air than is necessary for complete combustion of the fuel.  The vehicles also must incorporate direct fuel injection technology and achieve at least 125 percent of the 2002 model year city fuel economy rating.

Available credit amounts may vary and include a base credit amount based on fuel economy compared to the 2002 model year city fuel economy rating and an additional amount based on the vehicle’s lifetime fuel savings.  For a taxpayer to claim the credit, the original use of the vehicle must begin with the taxpayer, and the vehicle must be acquired for use or lease by the taxpayer and not for resale.

There is a limitation on the number of qualified hybrid and advanced lean-burn technology vehicles eligible for credit.  The phase-out period begins when a manufacturer sells 60,000 qualified hybrid and advanced lean-burn technology vehicles. Note that Volkswagen America has reached the limit and therefore it’s credit in 2010 is reduced. See note under table below.

Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th hybrid passenger automobile or light truck or advanced lean-burn technology motor vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit.  For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit.  No credit is allowed after the fifth quarter.

The qualifying vehicles and their credit amounts are:




Volkswagen Group America (includes Audi vehicles) reached the 60,000 vehicle limit in the 1st quarter of 2010.  Thus, the allowable credit is reduced by 50% for vehicles purchased for the balance of 2010.  The lean burn credit expires at the end of 2010, thus no credit available after 2010.