Guide to Government Incentives for Fuel-Efficient Commercial Trucks

By: on April 28, 2017

The benefits of increased fuel economy in your heavy-duty truck fleet are numerous–and so are the equipment costs. And now, there are government financial incentives to help you fit new trucks and equipment upgrades into your budget.

To that end, we’ve put together this comprehensive guide to provide all of the information and resources you need to get started. It explains the benefits of implementing fuel-saving technologies, the types of financial incentives available, eligibility requirements and how to start the process to obtain funds. It also provides a comprehensive breakdown of all programs offered at a federal, regional and state level, complete with important details, contact information and where you can learn more.

Benefits of Fuel-Efficient Fleets

When speaking to buyers evaluating transportation management and dispatch systems, a commonly requested application is a module to better manage fuel costs. But while fuel management technology can help control fuel spend for some organizations, it may simply be time to sunset older, inefficient trucks.

A fuel-efficient truck fleet lessens negative impacts on the environment, improves your company image and, most importantly, boosts your bottom line. A November 2012 Carbon War Room report found that purchasing new or retrofitting existing trucks with fuel-saving technologies can cut fuel costs by 30 percent and result in savings of up to $167,000 per vehicle over 10 years.

This report also found that employing a full suite of fuel-saving technologies generates annual fuel savings of $26,400 per tractor-trailer. When you consider that the upgrades pay for themselves in fuel savings in just 18 months, you have numbers you can’t ignore.

Don’t forget the non-financial perks fuel-efficient trucks afford. The same report estimates that Class 8 road freight emissions will increase by 29 percent in the next decade, releasing four gigatons of CO2 greenhouse gases (GHGs) in the process. With shippers and consumers increasingly concerned with the environmental impact of their goods, curbing your fleet’s GHG output and “greening” your image could give you an important edge over your competition.

Furthermore, the Environmental Protection Agency (EPA) has adopted GHG emissions regulations, so it’s in your best interest to bring your emissions output in line with new standards to avoid non-conformance penalties.

The long-term cost benefits of adopting fuel-efficient fleets are clear. But adding up the cost of a new tractor-trailer, top-of-the-line battery, aerodynamic fairings, advanced cruise control and a fuel-efficient transmission brings the price tag to nearly $130,000 per truck — a hefty upfront cost and tough sell for buyers.

Types of Incentives

Incentives are available at federal, regional and state levels. There are five types of incentives to assist you with purchasing fuel-saving upgrades:

1. GRANTS require the most paperwork and planning, but provide significant funding — sometimes up to 100% of project costs. Most grant programs require progress reports and recordkeeping after funds are awarded. As long as your project and records are in compliance, the funds don’t need to be repaid.

2. REBATES AND VOUCHERS are available when you purchase a specific vehicle or piece of equipment and use it for a specific purpose by a specific date. For example, if you purchase tires designed to decrease rolling resistance, be sure the brand is accepted by the rebate or voucher program. You may need to provide receipts, purchase orders, and original equipment manufacturer (OEM) certificates.

3. LOW COST LOANS help smaller companies with less-than-perfect credit ratings obtain financing for heavy-duty vehicle fuel-efficiency projects by offering low interest rates and down payments. You must pay back the funds you receive, plus interest and fees, within a specified timeframe.

4. TAX CREDITS directly reduce your tax liability. Many states offer alternative fuel vehicle (AFV) tax credits when you purchase or convert a vehicle to operate on an alternative fuel. Credits are typically available one time per vehicle and range from a few hundred to a few thousand dollars. These credits are then claimed on your tax return. You don’t need to supply receipts and purchase orders to the IRS when you file, but do retain them in your records, should the IRS request them.

5. TAX EXEMPTIONS are available at the point of purchase on qualified items, such as fuel and idle reduction equipment. You aren’t required to file paperwork to receive a tax exemption, but it’s good practice to retain receipts and purchase orders for your records.

Who Qualifies for Financial Incentives

To take advantage of funding opportunities, you must meet eligibility requirements. Incentive programs commonly stipulate the following:

  • Vehicle type
  • Fuel type
  • State or region of operation
  • Vehicle weight limit
  • Fleet size
  • Company revenue

Let’s look at the Texas Natural Gas Vehicle Grant Program as an example. Let’s say you want to add a new truck to your fleet. You operate out of Williamson County, Texas; 90 percent of the truck’s power is provided from compressed natural gas (CNG); the GVWR is 14,000 pounds and over 75 percent of miles will be accrued on Texas roads. Your truck is eligible for this incentive if it will replace an old truck in the same weight class, which you must destroy within 90 days of receiving funds.

With any program, carefully read the full details to determine your eligibility.

How to Apply

If your records are organized and easy to collect, the application process is a simple four step process:

  1. Choose a federal incentive from the list below, or search the Alternative Fuels Data Center (AFDC) database to find incentives available in your state.
  2. Confirm your project or purchase meets all eligibility requirements.
  3. Gather necessary documentation.
    1. Most grant, rebate/voucher, and loan programs require:
      • Completed application forms
      • Application fee (if required)
      • OEM certifications
      • Financial records
      • Project/equipment descriptions
      • Other required form or documentation
    2. To claim a tax credit or exemption, you may need:
      • Purchase orders and receipts
      • Certificates
      • Special licenses
  4. Submit your application or claim according to program instructions.

For grants, rebates and loans, it’s important to confirm approval of your funding request before making vehicle and equipment purchases.

It’s also important to note that some grant programs require follow-up documentation, such as proof of destruction of an old truck or mileage records for a specified amount of time. Be sure you supply all necessary follow-up records to keep your project in compliance and good standing with the program.

Fleet Incentive Programs

Locate available financial incentives below. For complete incentive details, follow the link or contact the program’s administrator.

You can also search for government incentives here.

Federal Incentive Programs

Program Details Type Contact
National Clean Diesel Campaign (NCDC) Grant funding for idle reduction, clean fuels, vehicle replacements and other strategies that reduce human exposure to diesel exhaust. Grant Jennifer Keller
Contact by email
SmartWay Finance Programs EPA-backed program offering loans to help small trucking companies reduce fuel costs and emissions. Incentives available at federal, regional, and state levels. Grants, Rebates, and Loans 734-214-4767
Contact by email
Community Development Transportation Lending Services (CDTLS) Provides financing for the purchase of retrofitted trucks and idle reduction technologies. Backed by EPA-funded SmartWay Finance Program. Loan 202-415-9682 or 800-891-0590 ext. 710
Alternative Fuel Excise Tax Credit Alternative fuels sold for use or used to operate a motor vehicle earn a tax credit of $0.50 per gallon. Tax Credit Excise Tax Branch
IRS / Office of Chief Counsel
Idle Reduction Technology Excise Tax Exemption Qualified onboard idle reduction devices and advanced insulations, and their installation, are exempt from federal excise tax. Tax Exemption Excise Tax Branch
IRS / Office of Chief Counsel

Regional Incentive Programs

Region Program Details Type Contact
Sacramento Federal Ozone Nonattainment area Sacramento Emergency Clean Air & Transportation Grant Program Provides grants to offset the cost of heavy-duty vehicle upgrades and exchanges. Grant Kristian Damkier
Contact by email
San Joaquin Valley Air Pollution Control District Truck Voucher Program Provides funds to replace heavy-duty diesel trucks with new, lower-emission trucks. Voucher 559-230-5858

State Incentive Programs

State Program Details Type Contact
Arkansas Alternative Fuel Vehicle Rebates Rebates for 50% of the cost to convert to hydrogen fuel, CNG, LNG, or propane, up to $4,500. Rebate 800-558-2633
Contact by email
Environmental Loans for Small Business Small business loans at 80% prime interest rate for heavy-duty trucking for pollution control measures. Loan Andrea Hopkins
501-682-0820 or 888-233-0326
California Hybrid Truck and Bus Voucher Incentive Program Voucher program up to $45,000 to reduce purchase cost of heavy-duty HEVs and ZEVs. Rebate 888-457-4847
Carl Moyer Air Quality Standards Program Provides grants for projects to reduce heavy-duty vehicle emissions. Grant 866-6DIESEL
Contact by email
Goods Movement Emission Reduction Program Grants to reduce emissions from heavy-duty freight movement. Grant 916-444-6637
Contact by email
Colorado Alternative Fuel, Advanced Vehicle, & Idle Reduction Technology Credit Tax credit up to $6,000 for purchase of idle reduction technology. Tax Credit John Doty
303-205-8211 ext. 6889
Contact by email
Connecticut Connecticut Clean Fuel Program Funding for municipalities to purchase alternative and clean fuel vehicles. Grant 860-594-2807
Contact by email
Georgia Alternative Fuel Vehicle Tax Credit Tax credit up to $2,500 for purchase or conversion of alternative fuel vehicle. Tax Credit James Udi
Contact by email
Kansas Alternative Fuel Vehicle Tax Credit Credit for 40% of the conversion cost for qualified AFVs from $4,000-$40,000, based on GVWR. Tax Credit 785-368-8222
Contact by email
Louisiana Alternative Fuel Vehicle Tax Credit Credits available for the purchase or conversion of an alternative fuel vehicle. This program is accepting applications, but payouts are currently on hold. Tax Credit
Minnesota Small Business Environmental Improvement and Auxiliary Power Unit Loan Program Offers small businesses low-interest loans up to $50,000 for the purchase of idle reduction technology. Loan Mike Nelson
Contact by email
Montana Alternative Fuel Vehicle Conversion Tax Credit An income tax credit up to 50% of the cost to convert vehicle to operate on qualified alternative fuel. Tax Credit 866-859-2254
Nebraska Dollar and Energy Saving Program Low-cost loans for alternative fuel vehicle projects up to $750,000. Loan 402-471-2867
New York Heavy-Duty Alternative Fuel Vehicle Voucher Incentive Program Incentives up to $40,000 for qualified alternative fuel vehicle projects. Voucher Tom Brotherton
303-825-7550 ext. 1
Contact by emailDavid Kantor
Contact by email
Oklahoma Alternative Fuel Vehicle Tax Credit A one-time credit of 50% of the incremental cost of purchasing or converting an AFV operated vehicle. Tax Credit
State Energy Loan Program Offers low-interest, fixed rate loans for energy conservation projects. Loan 503-378-4040
Contact by email
Texas NGV Grant Program Provides funding to encourage heavy-duty vehicle owners to repower or replace with natural gas. Grant Colin Donovan
Emissions Reduction Incentive Grants Program Provides grants to offset the cost of emissions reduction projects for high-emitting mobile diesel vehicles. Grant 800-919-8377
Washington Idle Reduction Tax Incentives Sales & use tax exemptions for parts and labor to enable heavy-duty diesel trucks to accept power for onboard electrification systems. Exemption
Wisconsin Diesel Truck Idling Grant Program Reimburses up to 50% for the purchase and installation of idling reduction equipment. As of 04-15-13, this program is not accepting application, but you may sign up to be notified when funding is available. Grant Jean Beckwith
Contact by email

Additional Resources

  • To learn about heavy-duty fuel economy and emissions standards, go here.
  • To calculate your fleet’s emissions and set emissions goals, go here.
  • To learn about Clean Cities programs helping fleets and consumers reduce petroleum use, go here.

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