I
119THCONGRESS
1
STSESSION H. R. 1293
To amend the Internal Revenue Code of 1986 to provide tax incentives
and fees for increasing motor vehicle fuel economy, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY13, 2025
Mr. C
ASTEN(for himself and Ms. MATSUI) introduced the following bill; which
was referred to the Committee on Ways and Means, and in addition to
the Committee on Energy and Commerce, for a period to be subsequently
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to provide
tax incentives and fees for increasing motor vehicle fuel
economy, and for other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
(a) S
HORTTITLE.—This Act may be cited as the 4
‘‘Vehicle Energy Performance Act of 2025’’. 5
(b) A
MENDMENT OF 1986 CODE.—Except as other-6
wise expressly provided, whenever in this Act an amend-7
ment or repeal is expressed in terms of an amendment 8
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to, or repeal of, a section or other provision, the reference 1
shall be considered to be made to a section or other provi-2
sion of the Internal Revenue Code of 1986. 3
SEC. 2. TAX CREDIT FOR VEHICLE ENERGY PERFORMANCE. 4
(a) I
NGENERAL.—Subpart B of part IV of sub-5
chapter A of chapter 1 (relating to other credits) is 6
amended by inserting after section 30D the following new 7
section: 8
‘‘SEC. 30E. VEHICLE ENERGY PERFORMANCE REBATE. 9
‘‘(a) A
LLOWANCE OFCREDIT.— 10
‘‘(1) I
N GENERAL.—There shall be allowed as a 11
credit against the tax imposed by this chapter for 12
the taxable year an amount equal to the amount de-13
termined under paragraph (2) with respect to any 14
new qualified high energy performance motor vehicle 15
placed in service by the taxpayer during the taxable 16
year. 17
‘‘(2) C
REDIT AMOUNT.—With respect to each 18
new qualified high energy performance motor vehi-19
cle, the amount determined under this paragraph 20
shall be equal to the amount (not greater than 21
$5,000) that bears the same ratio to $5,000 as— 22
‘‘(A) the excess of— 23
‘‘(i) the vehicle energy performance of 24
such vehicle, over 25
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‘‘(ii) the median vehicle energy per-1
formance for the model year immediately 2
preceding the model year of such vehicle, 3
bears to 4
‘‘(B) the excess of— 5
‘‘(i) the best vehicle energy perform-6
ance for the model year immediately pre-7
ceding the model year of such vehicle, over 8
‘‘(ii) the median vehicle energy per-9
formance for the model year immediately 10
preceding the model year of such vehicle. 11
‘‘(b) N
EWQUALIFIEDHIGHENERGYPERFORMANCE 12
M
OTORVEHICLE.—For purposes of this section, the term 13
‘new qualified high energy performance motor vehicle’ 14
means a passenger automobile or light truck— 15
‘‘(1) which is treated as a motor vehicle for 16
purposes of title II of the Clean Air Act, 17
‘‘(2) which achieves vehicle energy performance 18
that is greater than the median vehicle energy per-19
formance for the model year immediately preceding 20
the model year of such vehicle, 21
‘‘(3) for which standards are prescribed pursu-22
ant to section 32902 of title 49, United States Code, 23
‘‘(4) the original use of which commences with 24
the taxpayer, 25
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‘‘(5) which is acquired for use or lease by the 1
taxpayer and not for resale, and 2
‘‘(6) which is made by a manufacturer begin-3
ning with model year 2027. 4
‘‘(c) A
PPLICATIONWITHOTHERCREDITS.— 5
‘‘(1) B
USINESS CREDIT TREATED AS PART OF 6
GENERAL BUSINESS CREDIT .—So much of the credit 7
which would be allowed under subsection (a) for any 8
taxable year (determined without regard to this sub-9
section) that is attributable to property of a char-10
acter subject to an allowance for depreciation shall 11
be treated as a credit listed in section 38(b) for such 12
taxable year (and not allowed under subsection (a)). 13
‘‘(2) R
EFUNDABLE PERSONAL CREDIT .— 14
‘‘(A) I
N GENERAL.—For purposes of this 15
title, the credit allowed under subsection (a) for 16
any taxable year (determined after application 17
of paragraph (1)) shall be treated as a credit 18
allowable under subpart C for such taxable year 19
(and not allowed under subsection (a)). 20
‘‘(B) R
EFUNDABLE CREDIT MAY BE 21
TRANSFERRED.— 22
‘‘(i) I
N GENERAL.—A taxpayer may, 23
in connection with the purchase of a new 24
qualified high energy performance motor 25
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vehicle, transfer any refundable credit de-1
scribed in subparagraph (A) to any person 2
who is in the trade or business of selling 3
new qualified high energy performance 4
motor vehicles and who sold such vehicle to 5
the taxpayer, but only if such person clear-6
ly discloses to such taxpayer, through the 7
use of a window sticker attached to the 8
new qualified high energy performance ve-9
hicle— 10
‘‘(I) the amount of the refund-11
able credit described in subparagraph 12
(A) with respect to such vehicle, and 13
‘‘(II) a notification that the tax-14
payer will not be eligible for any cred-15
it under section 30D with respect to 16
such vehicle unless the taxpayer elects 17
not to have this section apply with re-18
spect to such vehicle. 19
‘‘(ii) C
ERTIFICATION.—A transferee 20
of a refundable credit described in sub-21
paragraph (A) may not claim such credit 22
unless such claim is accompanied by a cer-23
tification to the Secretary that the trans-24
feree reduced the price the taxpayer paid 25
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for the new qualified high energy perform-1
ance motor vehicle by the entire amount of 2
such refundable credit. 3
‘‘(iii) C
ONSENT REQUIRED FOR REV -4
OCATION.—Any transfer under clause (i) 5
may be revoked only with the consent of 6
the Secretary. 7
‘‘(iv) R
EGULATIONS.—The Secretary 8
may prescribe such regulations as nec-9
essary to ensure that any refundable credit 10
described in clause (i) is claimed once and 11
not retransferred by a transferee. 12
‘‘(d) O
THERDEFINITIONS.—For purposes of this 13
section: 14
‘‘(1) V
EHICLE ENERGY PERFORMANCE .—The 15
term ‘vehicle energy performance’ means, with re-16
spect to any vehicle, the combined fuel-economy rat-17
ing determined for the model and model year of such 18
vehicle. 19
‘‘(2) M
EDIAN VEHICLE ENERGY PERFORM -20
ANCE.—The term ‘median vehicle energy perform-21
ance’ means, with respect to any model year, the 22
median combined fuel-economy rating for all new 23
motor vehicles of such model year sold in the United 24
States. 25
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‘‘(3) BEST VEHICLE ENERGY PERFORMANCE .— 1
The term ‘best vehicle energy performance’ means, 2
with respect to any model year, the highest com-3
bined fuel-economy rating of any model of motor ve-4
hicle of such model year sold the United States. 5
‘‘(4) C
OMBINED FUEL-ECONOMY RATING.—The 6
term ‘combined fuel-economy rating’ means the com-7
bined fuel-economy rating determined in accordance 8
with section 32908 of title 49, United States Code, 9
and expressed in miles per gallon of gasoline equiva-10
lent. 11
‘‘(5) M
ODEL YEAR.—The term ‘model year’ has 12
the meaning given such term under section 32901(a) 13
of such title 49. 14
‘‘(6) M
OTOR VEHICLE.—The term ‘motor vehi-15
cle’ means any vehicle which is manufactured pri-16
marily for use on public streets, roads, and highways 17
(not including a vehicle operated exclusively on a rail 18
or rails) and which has at least 4 wheels. 19
‘‘(7) O
THER TERMS.—The terms ‘automobile’, 20
‘passenger automobile’, ‘light truck’, and ‘manufac-21
turer’ have the meanings given such terms in regula-22
tions prescribed by the Administrator of the Envi-23
ronmental Protection Agency for purposes of the ad-24
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ministration of title II of the Clean Air Act (42 1
U.S.C. 7521 et seq.). 2
‘‘(e) S
PECIALRULES.— 3
‘‘(1) B
ASIS REDUCTION.—For purposes of this 4
subtitle, the basis of any property for which a credit 5
is allowable under subsection (a) shall be reduced by 6
the amount of such credit so allowed (determined 7
without regard to subsection (c)). 8
‘‘(2) P
ROPERTY USED BY TAX -EXEMPT ENTI-9
TY.—In the case of a vehicle whose use is described 10
in paragraph (3) or (4) of section 50(b) and which 11
is not subject to a lease, the person who sold such 12
vehicle to the person or entity using such vehicle 13
shall be treated as the taxpayer that placed such ve-14
hicle in service, but only if such person clearly dis-15
closes to such person or entity in a document the 16
amount of any credit allowable under subsection (a) 17
with respect to such vehicle (determined without re-18
gard to subsection (c)). For purposes of subsection 19
(c), property to which this paragraph applies shall 20
be treated as of a character subject to an allowance 21
for depreciation. 22
‘‘(3) P
ROPERTY USED OUTSIDE UNITED 23
STATES, ETC., NOT QUALIFIED.—No credit shall be 24
allowable under subsection (a) with respect to any 25
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property referred to in section 50(b)(1) or with re-1
spect to the portion of the cost of any property 2
taken into account under section 179. 3
‘‘(4) R
ECAPTURE.—The Secretary shall, by reg-4
ulations, provide for recapturing the benefit of any 5
credit allowable under subsection (a) with respect to 6
any property which ceases to be property eligible for 7
such credit. 8
‘‘(5) E
LECTION NOT TO TAKE CREDIT .—No 9
credit shall be allowed under subsection (a) for any 10
vehicle if the taxpayer elects to not have this section 11
apply to such vehicle. 12
‘‘(6) I
NTERACTION WITH AIR QUALITY AND 13
MOTOR VEHICLE SAFETY STANDARDS .—A motor ve-14
hicle shall not be considered eligible for a credit 15
under this section unless such vehicle is in compli-16
ance with— 17
‘‘(A) the applicable provisions of the Clean 18
Air Act for the applicable make and model year 19
of the vehicle (or applicable air quality provi-20
sions of State law in the case of a State which 21
has adopted such provisions under a waiver 22
under section 209(b) of the Clean Air Act), and 23
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‘‘(B) the motor vehicle safety provisions of 1
sections 30101 through 30169 of title 49, 2
United States Code. 3
‘‘(7) I
NFLATION ADJUSTMENT .—In the case of 4
any model year beginning in a calendar year after 5
2027, each dollar amount in subsection (a)(2) shall 6
be increased by an amount equal to— 7
‘‘(A) such dollar amount, multiplied by 8
‘‘(B) the cost-of-living adjustment deter-9
mined under section 1(f)(3) for the calendar 10
year in which the model year begins, deter-11
mined by substituting ‘2026’ for ‘2016’ in sub-12
paragraph (A)(ii) thereof. 13
Any increase determined under the preceding sen-14
tence shall be rounded to the nearest multiple of 15
$100. 16
‘‘(8) O
NE CREDIT PER VEHICLE .—In the case 17
of any vehicle, the credit described in subsection (a) 18
shall only be allowed once with respect to such vehi-19
cle, as determined based upon the vehicle identifica-20
tion number of such vehicle. 21
‘‘(f) R
EPORTING OF VEHICLEENERGYPERFORM-22
ANCE.— 23
‘‘(1) V
EHICLE MANUFACTURERS .—Not later 24
than November 1 of each calendar year (beginning 25
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with calendar year 2026), each vehicle manufacturer 1
shall submit to the Secretary a report that in-2
cludes— 3
‘‘(A) the vehicle energy performance for 4
each model of that model year which was manu-5
factured by such manufacturer and sold in the 6
United States, and 7
‘‘(B) with respect to each such model of 8
such model year, the number of vehicles of such 9
model and model year sold in the United States 10
during the 1-year period beginning on October 11
1 of the preceding year. 12
‘‘(2) P
UBLICATION BY TREASURY .—Not later 13
than December 1 of each calendar year (beginning 14
with calendar year 2026), the Secretary shall publish 15
the median vehicle energy performance and the best 16
vehicle energy performance for that model year. 17
‘‘(g) R
EGULATIONS.— 18
‘‘(1) I
N GENERAL.—Except as provided in para-19
graph (2), the Secretary shall promulgate such regu-20
lations as necessary to carry out the provisions of 21
this section not later than 1 year after the date of 22
enactment. 23
‘‘(2) C
OORDINATION IN PRESCRIPTION OF CER -24
TAIN REGULATIONS.—The Secretary of the Treas-25
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ury, in coordination with the Secretary of Transpor-1
tation and the Administrator of the Environmental 2
Protection Agency, shall prescribe such regulations 3
as necessary to determine whether a motor vehicle 4
meets the requirements to be eligible for a credit 5
under this section.’’. 6
(b) C
REDITALLOWEDAGAINSTALTERNATIVEMIN-7
IMUMTAX.—Section 38(c)(4)(B) is amended by redesig-8
nating clauses (i) through (xii) as clauses (ii) through 9
(xiii), respectively, and by inserting before clause (ii) (as 10
so redesignated) the following new clause: 11
‘‘(i) the credit determined under sec-12
tion 30E,’’. 13
(c) D
ISPLAY OFCREDIT.—Section 32908(b) of title 14
49, United States Code, is amended— 15
(1) in paragraph (1)— 16
(A) by redesignating subparagraphs (E) 17
and (F) as subparagraphs (F) and (G), and 18
(B) by inserting after subparagraph (D) 19
the following new subparagraph: 20
‘‘(E) the amount of the vehicle energy perform-21
ance credit allowable with respect to the sale of the 22
automobile under section 30E of the Internal Rev-23
enue Code of 1986 (26 U.S.C. 30E).’’, and 24
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(2) in paragraph (2), by striking ‘‘paragraph 1
(1)(E)’’ and inserting ‘‘paragraph (1)(F)’’. 2
(d) C
ONFORMINGAMENDMENTS.— 3
(1) Section 38(b) is amended by striking ‘‘plus’’ 4
at the end of paragraph (40), by striking the period 5
at the end of paragraph (41) and inserting ‘‘, plus’’, 6
and by adding at the end the following new para-7
graph: 8
‘‘(42) the portion of the vehicle energy perform-9
ance rebate to which section 30E(c)(1) applies.’’. 10
(2) Section 1016(a) is amended by striking 11
‘‘and’’ at the end of paragraph (37), by striking the 12
period at the end of paragraph (38) and inserting ‘‘, 13
and’’, and by adding at the end the following new 14
paragraph: 15
‘‘(39) to the extent provided in section 16
30E(e)(1).’’. 17
(3) Section 6501(m) is amended by inserting 18
‘‘30E(e)(6),’’ after ‘‘30D(e)(4),’’. 19
(4) The table of section for subpart C of part 20
IV of subchapter A of chapter 1 is amended by in-21
serting after the item relating to section 30D the 22
following new item: 23
‘‘Sec. 30E. Vehicle energy performance rebate.’’.
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SEC. 3. LOW VEHICLE ENERGY PERFORMANCE FEE. 1
(a) I
NGENERAL.—Section 4064 is amended to read 2
as follows: 3
‘‘SEC. 4064. LOW VEHICLE ENERGY PERFORMANCE FEE. 4
‘‘(a) I
MPOSITION OFTAX.—There is hereby imposed 5
on the sale by the manufacturer of each low energy per-6
formance vehicle a tax equal to the product of $5,000, 7
multiplied by the quotient of— 8
‘‘(1) the excess of— 9
‘‘(A) the median vehicle energy perform-10
ance for the model year immediately preceding 11
the model year of such vehicle, over 12
‘‘(B) the vehicle energy performance of 13
such vehicle, divided by 14
‘‘(2) the excess of— 15
‘‘(A) the best vehicle energy performance 16
for the model year immediately preceding the 17
model year of such vehicle, over 18
‘‘(B) the median vehicle energy perform-19
ance for the model year immediately preceding 20
the model year of such vehicle. 21
‘‘(b) L
OWENERGYPERFORMANCE VEHICLE.—For 22
purposes of this section— 23
‘‘(1) I
N GENERAL.—The term ‘low energy per-24
formance vehicle’ means a passenger automobile or 25
light truck— 26
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‘‘(A) which is treated as a motor vehicle 1
for purposes of title II of the Clean Air Act, 2
‘‘(B) which achieves vehicle energy per-3
formance that is lower than the median vehicle 4
energy performance, and 5
‘‘(C) which is made by a manufacturer be-6
ginning with model year 2029. 7
‘‘(2) E
XCEPTION FOR CERTAIN VEHICLES .— 8
The term ‘low energy performance vehicle’ does not 9
include any vehicle— 10
‘‘(A) which— 11
‘‘(i) has a gross vehicle weight rating 12
of more than 8,500 pounds, and 13
‘‘(ii) is determined by the Secretary to 14
be a vehicle which is designed for commer-15
cial use, or 16
‘‘(B) sold for use and used— 17
‘‘(i) as an ambulance or combination 18
ambulance-hearse, 19
‘‘(ii) by the United States or by a 20
State or local government for police or 21
other law enforcement purposes, or 22
‘‘(iii) for other emergency uses pre-23
scribed by the Secretary by regulations. 24
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‘‘(c) OTHERDEFINITIONS.—For purposes of this 1
section: 2
‘‘(1) V
EHICLE ENERGY PERFORMANCE .—The 3
term ‘vehicle energy performance’ means, with re-4
spect to any vehicle, the combined fuel-economy rat-5
ing determined for the model and model year of such 6
vehicle. 7
‘‘(2) M
EDIAN VEHICLE ENERGY PERFORM -8
ANCE.—The term ‘median vehicle energy perform-9
ance’ means, with respect to any model year, the 10
median combined fuel-economy rating for all new 11
motor vehicles of such model year sold in the United 12
States. 13
‘‘(3) B
EST VEHICLE ENERGY PERFORMANCE .— 14
The term ‘best vehicle energy performance’ means, 15
with respect to any model year, the highest com-16
bined fuel-economy rating of any model of motor ve-17
hicle of such model year sold the United States. 18
‘‘(4) C
OMBINED FUEL-ECONOMY RATING.—The 19
term ‘combined fuel-economy rating’ means the com-20
bined fuel-economy rating determined in accordance 21
with section 32908 of title 49, United States Code, 22
and expressed in miles per gallon of gasoline equiva-23
lent. 24
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‘‘(5) MODEL YEAR.—The term ‘model year’ has 1
the meaning given such term under section 32901(a) 2
of such title 49. 3
‘‘(6) M
OTOR VEHICLE.—The term ‘motor vehi-4
cle’ means any vehicle which is manufactured pri-5
marily for use on public streets, roads, and highways 6
(not including a vehicle operated exclusively on a rail 7
or rails) and which has at least 4 wheels. 8
‘‘(7) O
THER TERMS.—The terms ‘automobile’, 9
‘passenger automobile’, ‘light truck’, and ‘manufac-10
turer’ have the meanings given such terms in regula-11
tions prescribed by the Administrator of the Envi-12
ronmental Protection Agency for purposes of the ad-13
ministration of title II of the Clean Air Act (42 14
U.S.C. 7521 et seq.). 15
‘‘(d) I
NFLATIONADJUSTMENT.—In the case of any 16
model year beginning in a calendar year after 2029, each 17
dollar amount in subsection (a)(2) shall be increased by 18
an amount equal to— 19
‘‘(1) such dollar amount, multiplied by 20
‘‘(2) the cost-of-living adjustment determined 21
under section 1(f)(3) for the calendar year in which 22
the model year begins, determined by substituting 23
‘2028’ for ‘2016’ in subparagraph (A)(ii) thereof. 24
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Any increase determined under the preceding sentence 1
shall be rounded to the nearest multiple of $100.’’. 2
(b) C
ONFORMINGAMENDMENTS.— 3
(1) The heading for part I of subchapter A of 4
chapter 32 is amended by striking ‘‘
GAS’’ and in-5
serting ‘‘
FUEL’’. 6
(2) The table of parts for subchapter A of chap-7
ter 32 is amended by striking ‘‘Gas’’ in the item re-8
lating to part I and inserting ‘‘Fuel’’. 9
(3) The table of sections for part I of sub-10
chapter A of chapter 32 is amended by striking 11
‘‘Gas’’ in the item relating to section 4064 and in-12
serting ‘‘Fuel’’. 13
(4) The heading for subsection (d) of section 14
1016 is amended by striking ‘‘G
ASGUZZLERTAX’’ 15
and inserting ‘‘L
OWVEHICLEENERGYPERFORM-16
ANCEFEE’’. 17
(5) The heading for subsection (e) of section 18
4217 is amended by striking ‘‘G
ASGUZZLERTAX’’ 19
and inserting ‘‘L
OWVEHICLEENERGYPERFORM-20
ANCEFEE’’. 21
(6) The heading for subparagraph (B) of sec-22
tion 4217(e)(3) is amended by striking ‘‘
GAS GUZ-23
ZLER TAX’’ and inserting ‘‘LOW VEHICLE ENERGY 24
PERFORMANCE FEE ’’. 25
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(7) Section 4217(e) is amended by striking 1
‘‘gas guzzler tax’’ each place it appears and insert-2
ing ‘‘low vehicle energy performance fee’’. 3
SEC. 4. FUEL ECONOMY OF DUAL FUELED AUTOMOBILES. 4
(a) M
EASUREMENT OF FUELECONOMY FORELEC-5
TRICDUALFUELEDAUTOMOBILES.—Section 32905(e) of 6
title 49, United States Code, is amended— 7
(1) in paragraph (1), in the matter preceding 8
subparagraph (A)— 9
(A) by striking ‘‘At the request of the 10
manufacturer, the Administrator may’’ and in-11
serting ‘‘The Administrator shall’’; and 12
(B) by striking ‘‘model year 2015’’ and in-13
serting ‘‘model year 2026’’; and 14
(2) by amending paragraph (2) to read as fol-15
lows: 16
‘‘(2) R
EVIEW AND UPDATING OF FORMULA .— 17
Not later than 3 years after the date of the enact-18
ment of this paragraph, and every 3 years there-19
after, the Administrator shall, using real-world data 20
if possible, review and update the formula for deter-21
mining under paragraph (1) percentage utilization 22
on gasoline or diesel fuel and percentage utilization 23
on electricity.’’. 24
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(b) FUELECONOMYINFORMATION FOR DUAL 1
F
UELEDAUTOMOBILES.— 2
(1) L
ABELING REQUIREMENTS AND CON -3
TENTS.—Section 32908(b)(3) of title 49, United 4
States Code, is amended— 5
(A) by redesignating subparagraphs (B), 6
(C), and (D) as subparagraphs (D), (E), and 7
(F), respectively; and 8
(B) by inserting after subparagraph (A) 9
the following: 10
‘‘(B) indicate the fuel economy of the auto-11
mobile when operated primarily on alternative fuel; 12
‘‘(C) indicate the multi-day average fuel econ-13
omy of the automobile when operated on a combina-14
tion of alternative fuel and gasoline or diesel fuel, 15
with the percentage utilization of alternative fuel 16
and the percentage utilization of gasoline or diesel 17
fuel being determined by a formula based on real- 18
world data and updated not less frequently than 19
every 3 years;’’. 20
(2) F
UEL ECONOMY INFORMATION BOOKLET .— 21
Section 32908(c)(2)(B) of title 49, United States 22
Code, is amended— 23
(A) in clause (i), by striking ‘‘; and’’ and 24
inserting a semicolon; 25
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•HR 1293 IH
(B) by redesignating clause (ii) as clause 1
(iii); and 2
(C) by inserting after clause (i) the fol-3
lowing: 4
‘‘(ii) information on the multi-day average fuel 5
economy of the automobile when operated on a com-6
bination of alternative fuel and gasoline or diesel 7
fuel, as indicated under subsection (b)(3)(C); and’’. 8
(c) A
PPLICABILITY.—The amendments made by this 9
section shall apply with respect to automobiles of model 10
year 2027 or later. 11
Æ
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