South Carolina’s Alternative-Fuel Credits

October 15, 2006 · Filed Under Related News, Tax Credits

Last year, the only tax incentive South Carolina offered to consumers for using alternative fuels was a $1,000 tax credit for installing a solar water heater. The state provided only enough funding for 20 people to receive the tax credit, and no one applied.

“In the past year and a half, we’ve seen tremendous awareness of energy issues and global warming issues,” said John Clark, director of the South Carolina Energy Office. “It seems to be snowballing, nationally and locally.”

The federal government approved tax credits for purchasing hybrid vehicles, solar heating systems, energy-efficient windows and other fuel-saving measures in 2005.

Unlike the federal incentives, South Carolina’s income tax credit for hybrid vehicle purchases is not slated to expire. The state credit is worth 20 percent of the current federal credit, which varies by vehicle make, model and year.

The state sales tax rebate for flex-fuel vehicles, which can use either gasoline or the ethanol-gas blend known as E85, is good only through June 30, 2007, but applies to new and used vehicles.

Hybrid vehicles typically cost more than non-hybrids, and there are waiting lists to buy some models, but vehicles that can run on E85 are common and usually carry the same price as similar models that only run on gasoline.

“There are a good number of E85 vehicles on the market,” said Pat Watson, executive vice president of the South Carolina Automobile Dealers Association. “You didn’t hear much about them before, when gas prices were low.”

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