Tax Incentives and Mandates

Growing concern regarding the destruction of our environment and the impact on health care of the public along with the country's dependence on imported sources of oil has lead the federal government to enact numerous legislations to encourage alternate fuel use and technologies to reduce the emissions of vehicles and reduce the nation's reliance on foreign fuels. The fuel and maintenance savings afforded by the Multi-Fuel System coupled with the tax incentives makes the pay back period extremely short. The Multi-Fuel System represents the only truly economically realistic alternate fuel solution.

Federal Tax Incentives

The Energy Policy Act of 1992 in addition to fleet mandates, encourages alternate fuel use by federal tax deductions. The federal tax deductions are for both fleets and individual vehicles and can be taken by individuals, partnerships, corporations, etc. that file federal tax returns. Deductions can be taken for the cost and installation of alternate fuel system equipment installed on existing vehicles or the incremental cost of purchasing a new vehicle with alternate fuel capabilities. Please consult IRS Publication #535, "Section 15, Electric and Clean-Fuel Vehicles" and with your accountant or tax specialist for conformation.

Up to $2,000.00 for a vehicle of 10,00 lbs. or less such as a typically passenger car,
sedan, coupe, sport car, hatch-back, mini-van, and up to light duty trucks such as pick-up
trucks and vans.

Up to $5,000.00 for a vehicle weighing between 10,000 and 26,000 lbs.

Up to $50,000.00 for a vehicle greater than 26,000 lbs. or buses capable of holding 20 or
more people.

Up to $100,000.00 for the construction of alternate fuel refueling facility.

Federal Mandates

The federal legislations of the Alternative Motor Fuels Act of 1988, the Clean Air Act of 1990, and the Energy Policy Act of 1992 encourage clean-burning vehicles by placing mandatory mandates upon fleets that they must purchase or convert a percentage of their new vehicle purchases to alternate fuel use. The definition of fleets varies between legislations, but it safe to assume private fleets of ten vehicles or more regardless of their nightly garaging will have to conform. If vehicles are leased they are considered a part of the leases fleet if the vehicle is in use for more then thirty (30) days. Vehicles are still considered part of a fleet, even if their ownership is other such as vehicles operator, holding company, etc., if their primary function is fleet use and they are routinely present at a central location.

ENERGY POLICY ACT CLEAN AIR ACT

YEAR	Private/ Municipal Fleets (%)	Fuel Provider Fleets (%)	State Fleets (%)	Federal Fleets (%)	GVW less 8,500 lbs. (%)	GVW less 26,000 lbs. (%)

1997		50%	15%	33%
1998		70%	25%	50%	30%	50%
1999	20%	90%	50%	75%	50%	50%
2000	20%	90%	75%	75%	70%	50%
2001	20%	90%	75%	75%	70%	50%
2002	30%	90%	75%	75%	70%	50%
2003	40%	90%	75%	75%	70%	50%
2004	50%	90%	75%	75%	70%	50%
2005	60%	90%	75%	75%	70%	50%
2006	70%	90%	75%	75%	70%	50%

State Incentives

The following states have additional incentives, in addition to the federal tax deductions listed above. Please check with the state in which your vehicle is registered for more information and any new or additional incentives:

ARIZONA HB 2095, allows business and individuals to deduct from gross income 25% of the cost of a conversion up to $5,000.00 preformed by a individual and up to $3,000.00 preformed by a business. The purchase price of refueling equipment up to $5,000.00 and 50% of the interest paid on a vehicle may also be deducted. HB 2575, provides tax credits of $500.00 in 1997 and $250.00 in 1998 for AFV purchases. Reduced vehicle registration fees.

ARKANSAS A $250,000 alternate fuel conversion rebate program for 50% rebates of conversions and reduced alternate fuel tax rates.

COLORADO 5% tax credit for business vehicles. HB 1305, provides AFV rebates up to 50% of cost of conversion, up to $1,500.00 for light-duty vehicles, $2,500.00 for light-duty trucks, $3,500 for medium-duty trucks, and $6,000.00 for heavy-duty trucks.

CONNECTICUT PA 94-170, provides a 50% tax credit to convert vehicles and alternate fuels are exempt from state motor fuel tax.

ILLINOIS PL 89-410, provides a 80% of a vehicle's conversion cost is eligible for a rebate up to $4,000.00.

KANSAS HB 2161, provides up to 1/1/99 a 50% tax credit up to $2,500.00 and thereafter 40% tax credit up to $2,000.00 for vehicle conversion and reduced state road tax on alternate fuels.

LOUISIANA Act 1060, provides a 20% income tax credit for vehicle conversion and refueling facilities.

MARYLAND State Income tax credit of $800.00 for passenger vehicles and $1,600.00 for light-duty trucks. Reduced state road tax on alternate fuels and no sales or use tax on alternate fuel equipment.

MASSACHUSETTS Reduced road taxes on LPG and CNG.

NEVADA Reduced road taxes on LPG and CNG.

NORTH CAROLINA HB 1429, provides a 10% tax credit up to $200.00 for vehicles under 10,000 lbs. GVW or up to $500.00 for vehicles over 10,000 lbs. GVW.

OKLAHOMA HB 2169, provides a 50% tax credit on vehicle purchase or conversion. $100.00 annual permit fee in lieu of payment of state road tax on alternate fuels.

OREGON HB 2130, provides a 35% state tax credit for incremental cost of purchase or conversion of vehicle.

UTAH HB 43, provides a 20% state tax credit up to $400.00.

VIRGINIA 10% state tax credit for purchase or conversion of vehicles. AFV vehicles can obtain specialty "clean motor vehicle" license plates and operate in high-occupancy vehicle lanes, regardless of the number of vehicle passengers.

WEST VIRGINIA State income tax credits up to $3,750.00 for vehicles with less than a 10,000 lbs. GVW, up to $9,250.00 for vehicles with a GVW of 10,000-26,000 lbs., and up to $50,000.00 for vehicles weighing over 50,000 lbs.

CONTACT US for more information or the Welsh Technologies dealer
nearest you.

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WELSH TECHNOLOGIES, INC. River Edge, NJ 07661 201.489.3465

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