Alternative Fuels Incentive Act of 1991

Alternative Fuels Incentive Act of 1991 - Amends the Internal Revenue Code to permit an income tax credit for investments in qualified clean-burning (natural gas, liquefied petroleum gas, or alcohol) motor vehicle fuel property. Permits a 20 percent credit from 1992 through 2001, phasing out the credit in five percent increments annually thereafter to reach zero percent at the end of 2004. Applies the credit to tangible property that is: (1) equipment designed either to modify a motor vehicle so that it will be propelled by a clean-burning fuel or to assist in delivering such fuel into such vehicles; or (2) a motor vehicle propelled by clean-burning fuel.

Authorizes the Secretary of the Treasury to make credit-equivalent payments to States and to local governments in connection with qualified property.