Alternative Motor Vehicle Credit

DEFINITION of 'Alternative Motor Vehicle Credit'

A tax credit given to individuals who purchase vehicles that derive their power from alternative energy sources. Taxpayers are eligible to receive this nonrefundable alternative motor vehicle tax credit if they are the original purchasers of a vehicle after January 1, 2006. The vehicle must also qualify and the resulting tax credit will vary depending on the model.

BREAKING DOWN 'Alternative Motor Vehicle Credit'

The alternative motor vehicle credit is designed to encourage the purchase and use of alternative fuel vehicles. The tax credit is claimed on Form 8910, and is credited to the taxpayer after all other nonrefundable credits have been subtracted from the taxpayer's tax liability. If the vehicle is used for business, then it is carried to Form 3880 for the general business credit. Information on qualifying vehicles can be found on the IRS website.