On September 30, the U.S. Environmental Protection Agency (EPA) announced two funding opportunities for school bus fleets serving public schools, totaling approximately $17 million in rebate funding to help replace old diesel school buses.

First, the 2021 Diesel Emissions Reduction Act (DERA) School Bus Rebates program will offer approximately $10 million to public and private fleet owners for the replacement of old diesel school buses with new buses certified to EPA’s cleanest emission standards. The EPA will award selected applicants $20,000-65,000 per bus depending on the fuel type for scrapping and replacing old buses. The EPA has been awarding these rebates annually since the passage of DERA in 2010 to reduce harmful emissions from older, dirtier diesel vehicles.

Old school buses eligible to be replaced through the DERA program include those:

  • Used to transport 10+ pre-primary, primary, or secondary school students to school or homes
  • Driven 10,000 or more miles over the last 12 months or calendar year, or in use 4+ days/week during the current school year
  • Owned by applicant without any active liens
  • Class 3-8 diesel-powered buses greater than 10,000 lb. Gross Vehicle Weight Rating (GVWR)


  • Engine and chassis must be scrapped before receiving rebate payment
  • Replaced buses must be operational at time of replacement
  • Replaced buses must be powered by 2006 or older model year engine

The eligible replacement buses must be powered by a 2017 or newer model year engine and may operate on diesel, gasoline, battery electric, compressed natural gas (CNG), or propane. They must not be ordered prior to receiving the signed EPA selection letter and need to operate in a similar manner and over similar routes as the bus being replaced. Applicants will be selected in a lottery, with at least one selectee from each state/territory represented in the applicant pool.

Second, the 2021 American Rescue Plan (ARP) Electric School Bus Rebates program will provide $7 million to fund the replacement of old diesel school buses with new electric school buses for underserved school districts, tribal schools, and private fleets serving those districts and schools. Selected applicants will receive $300,000 per bus for up to four electric school bus replacements. A list of eligible school districts, as well as a table charting the key differences between DERA and ARP funding, is available on the 2021 ARP Electric School Bus Rebates website.

For both rebate programs, the deadline for emailing applications with scans of bus titles and registrations to DERARebates@epa.gov is Friday, November 5, 2021 by 4 p.m. eastern time.