A variety of federal, state, and local incentives exist for NGV owners. One of the largest incentives can be an income tax credit (not deduction).

State specific websites often exist to detail incentives available to companies and the public, like this one from the Utah State Tax Commission (although one must do the paperwork through the Utah Division of Air Quality). Search online for AFV benefits or incentives available in your individual state.

I would recommend a conservative and thorough approach to claiming AFV incentives (meaning, heavily consult with your tax professional). In Utah, there are many people advertising a "$3,000 tax credit" on the purchase of a vehicle when that isn't always the case. In Utah (but legislation will change on 01/01/2009), OEM converted NGV's (dedicated or bi-fuel) are eligible for a maximum tax credit of $3,000, based on the vehicle's conversion cost at manufacture date. Aftermarket conversions are eligible for a maximum tax credit of $2,500, based on the cost of conversion at conversion date.

Now, for two examples.

2008 Honda Civic GX
(NGV version of the Civic LX, from which we will base our conversion cost).

  MSRP Civic GX = $24,590
- MSRP Civic LX = $16,960
---------------------------------
MSRP Difference (Conversion Cost) = $7,630

Conversion cost x 50% = $3,815 $3,000 (maximum amount)

However, there is also a $4,000 federal tax credit available for a new GX.

$3,000 (state tax credit) + $4,000 (federal tax credit) = $7,000 (federal/state tax credits)

So, we are able reclaim $7,000 of the $7,630 conversion cost of our vehicle.

2000 Ford Contour (Bi-fuel)
(My vehicle)

I have a window sticker (which was difficult to locate!) showing that the CNG option on my vehicle cost $5,075 when manufactured.

Conversion cost ($5,075) x 50% = $2,537.50 (state tax credit)

I was able to claim 50% of this conversion cost against my state income taxes, for the amount of $2,537.50 (obviously less than the $3,000 maximum advertised by some sellers).