Tax Credits

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The State of Oklahoma offers multiple tax incentives for various energy efficiency and alternative fuel efforts in the state. Tax credits are managed by the Oklahoma Tax Commission.

For questions regarding Oklahoma’s alternative fuel tax incentives, interpretations, rulings, and/or eligibility, contact the Oklahoma Tax Commission Office of Audit and Compliance at (405) 521-3133.

Tax Credits

For more information, contact the Oklahoma Tax Commission at (405) 521-3133 or otcmaster@tax.ok

Alternative Fuel Vehicle and Alternative Fuel Infrastructure Tax Credit

(68 O.S. 2357.22)

These have both been extended to 2027, however now the credit will be calculated on a percentage basis. For the Alternative Fuel Vehicle Tax Credit, "clean burning" is defined as vehicles powered by compressed natural gas, liquified natural gas, liquified petroleum gas, and electricity. The credit will now be calculated according to weight, maximum credit amounts are: $5,500 for vehicles under 6,000 lbs.; $9,000 for 6,001-10,000 lbs.; $26,000 for 10,001-26,500 lbs.; and $50,000 for 26,501 lbs. and above.

 

The Alternative Fuel Infrastructure Tax credit will now be for 45% a tax credit is available for up to 45% of the cost of installing commercial alternative fueling infrastructure. Eligible alternative fuels include natural gas, propane, and electricity. The infrastructure must be new and must not have been previously installed or used to fuel alternative fuel vehicles. A tax credit is also available for up to 50% of the cost of installing a residential compressed natural gas fueling system, up to $2,500. The tax credit may be carried forward for up to five years.

A statewide cap of $20 million will go into effect for tax year 2020. If credits reach 80% of the total annual limit, the Oklahoma Tax Commission must notify the Office of the State Secretary of Energy and Environment.

Zero Emissions Tax Credit

(68 O.S. § 2357.32A)

Oklahoma encourages alternative, zero-emission fuel production by providing tax credits to producers of electricity utilizing such sources. An income tax credit is allowed based on the amount of electricity generated by a qualified zero-emission facility. Credits earned prior to January 1, 2014, are transferable and any unused credit may be carried over for a period of 10 years. For credits earned on or after January 1, 2014, any credit earned but not used shall be refunded at an amount equal to 85% of the amount of the credit. The credit is $0.0050 for each kilowatt-hour of electricity generated by zero-emission facilities and is available for a period of 10 years. With respect to electricity generated by wind, the facility must be placed in operation not later than July 1, 2017. With respect to electricity generated by moving water, sun, or geothermal energy, the facility must be placed in operation not later than December 31, 2021. Effective July 1, 2019, taxpayers have the option of irrevocably electing to defer the refund of the tax credit for 10 years. Any credits not directly refunded may be carried forward as a credit against subsequent income tax liability for a period not exceeding ten years. If a taxpayer makes the irrevocable election to carry over credits for a given tax year, any credits remaining in the 10th year of carry forward shall be refunded at 85%.

-Information courtesy of the Oklahoma Department of Commerce