Hybrid Car Tax Credit ~ Hybrid Car Review
Hybrid Car Review: Hybrid Car Tax Credit

Monday, June 12, 2006

Hybrid Car Tax Credit

Chances are, you're looking for current information on the hybrid car tax credit. Follow the link to find out about the 2007 hybrid car tax credit.

The following list shows the cars approved by the IRS for the federal tax credit in 2006. Any owners of vehicles purchased or placed in service in 2006 are eligible.

  • 2007 Toyota Camry Hybrid - $2,600
  • 2005 Toyota Prius - $3,150
  • 2006 Toyota Prius - $3,150
  • 2006 Toyota Highlander 4WD Hybrid - $2,600
  • 2006 Toyota Highlander 2WD Hybrid - $2,600
  • 2007 Lexus GS 450h - $1,550
  • 2006 Lexus RX400h 2WD - $2,200
  • 2006 Lexus RX400h 4WD - $2,200
  • 2006 Ford Escape Hybrid Front WD - $2,600
  • 2006 Ford Escape Hybrid 4 WD - $1,950
  • 2006 Mercury Mariner Hybrid 4 WD - $1,950
  • 2005 Honda Insight CVT - $1,450
  • 2006 Honda Insight CVT - $1,450
  • 2005 Honda Civic Hybrid MT and CVT - $1,700
  • 2006 Honda Civic Hybrid CVT - $2,100
  • 2005 Honda Accord Hybrid AT and Navi AT - $650
  • 2006 Honda Accord Hybrid AT w/updated calibration and Navi AT w/updated calibration - $1,300*

  • *2006 Honda Accord Hybrid AT and Navi AT without updated calibration qualify for a credit of $650.

    The Energy Policy Act of 2005 replaced the clean-fuel burning deduction with a tax credit. A tax credit is better than a deduction since the credit is subtracted directly from the total amount of federal tax owed. But keep in mind this credit can only be applied to vehicles purchased or placed in service on or after January 1, 2006.

    Hybrid Car Leases
    Keep in mind that those who lease hybrid cars are not eligible for the federal tax credit, although companies that lease hybrid cars are.

    Future Tax Credits
    Future consumers of Toyotas hybrids should be aware of the 60,000 vehicles sold limitation. Toyota has already passed this limit and so the tax credit reduction is already in play. According to the IRS, taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th hybrid or advance lean burn technology. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.

    That means you have until September 30 to purchase a Toyota hybrid and still be able to qualify for the full tax credit. From October 1st through the next two quarter, you will only be eligible for half of the credit.

    Hybrid Technology

    Hybrid technology
    is currently available in cars, suvs and trucks. Hybrid vehicles are powered by engines with dual power sources, one gas the other electric.

    Local Tax Incentives
    Some states also offer other incentives to those who buy hybrid vehicles. Some allow hybrid vehicles into the hov lanes, others give tax incentives. And even some towns and cities let hybrid cars park for free in metered parking spots. Check with your local authorities.

    Check with your tax advisor for the details.

    Get Four Free Price Quotes From Yahoo! Autos Hybrid Research and Pricing at Edmunds.com


    Anonymous said...

    Do the 2007 model Prius have the full $3100 tax rebate if they are purchased befor the end of September?

    Mike said...

    Although the IRS hasn't published any numbers on the 2007 Prius I don't believe the credit will be any different from the 2006 model. Although I'm not sure about the Touring Edition Prius.

    The only limit you might face is whether you take delivery of the hybrid vehicle on or before September 30. It's not enough to purchase it, you have to 'put it in service'.

    All of this is my opinion on the matter and I would recommend you talk to a tax professional (and not just the dealership).

    BTW: Here are the forms you need to claim the hybrid tax credit.

    Some more information on the hybrid federal tax credit phase out period.

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