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Hybrid cars and Federal Income Tax Reductions

Updated Tuesday, March 12, 2007

--New-->  What? You don't qualify for your hybrid vehicle tax credit?

The new clean vehicle tax credit calls for a credit of between $500 and $3400, but the credit will be capped at 60,000 vehicles per manufacturer.

Thus, credits for Toyota hybrids will quickly run out. As of September 30, 2006, tax credits for Toyota hybrids, such as the Prius, Highlander hybrid, Lexus RX400h, and the Camry hybrid were cut in half. Then again, in April, tax credits on Toyota hybrids will again be cut in half.

All other hybrids will continue to qualify for the full tax credit.

While the tax credits for hybrid cars have not been officially calculated by the IRS, ACEE has estimated what those credits should be by vehicle.

Ford Escape Hybrid = 2wd=$2600.00; 4wd=$1950.00
Honda Accord Hybrid =  $1300.00 for Accord hybrids with updated control calibration, $650.00 for those without
Honda Civic Hybrid = Auto=$2100.00; Man=$1700.00
Honda Insight Hybrid = Auto=$1450.00
Lexus RX400h Hybrid = $2,200.00 (Now Reduced by 50%)
Mercury Mariner Hybrid = $1950.00
Nissan Altima Hybrid = $1950.00
Toyota Camry Hybrid = $2600.00 (Now Reduced by 50%)
Toyota Highlander Hybrid = 2wd=$2,600.00; 4wd=$2,200.00 (Now Reduced by 50%)
Toyota Prius Hybrid = $3150.00 (Now Reduced by 50%)

(The first number is the original credit. If the credit has been reduce, the percentage of the reduction is listed.)

After the full credits have been reached, the full credit will still be available, but for only one more quarter. After this quarter, the credit will drop 50% for two more quarters, then 25% for two more quarters, and then it fully expires.

Also, depending upon your income, you may qualify for less than the full tax credit. Please consult your tax advisor.

Before 2006

Tax credits for hybrid cars were included in the Energy Bill approved by Congress. Unfortunately, clean vehicle tax credits are capped and diesel vehicles are also eligible. While the credits are a small gain, the clean vehicle tax credit appears that it will become just another loophole for the Big 3 to increase their fuel inefficiency (More)

Hybrid cars such as the Toyota Prius, Honda Civic Hybrid, Honda Accord Hybrid, Ford Escape Hybrid, Lexus RX400h Hybrid, Toyota Highlander Hybrid qualify for a one-time federal income tax deduction of up to $2,000 if they were purchased before before 2006.

Consumers that purchase one of these hybrids in 2005 can utilize the Clean Fuel tax deduction on line 32 of your 1040 tax form (more info). In 2006, this credit was scheduled to be reduced to $500.

More on this, Hybrid tax credits and carpool lane privileges: It's all hype.

Originally posted, January 24, 2005

The Ford Escape Hybrid  The world's first hybrid SUV.
V6 power with V4 fuel efficiency, the Escape hybrid offers SUV functionality and environmental awareness.  (more) ( test drive)
The Honda Accord Hybrid  Simply the best Accord.
Faster than a conventional Accord, the hybrid Accord is the first V6 hybrid and is shows. (more) (test drive)
The Honda Civic Hybrid The first converted hybrid vehicle
Looks like a Civic, drives a Civic, but at 50 mpg it gets 40 percent better gas mileage than a regular Civic. (more)
The Lexus RX400h Hybrid The world's most luxurious hybrid SUV.
Due out April 15, this hot hybrid has already received 11,000 down-payments  (more)
The Toyota Prius Hybrid   The hybrid car leader at just $20,000?
Simply an unbelievable piece of automotive technology. The future is here. (more) (test drive)
The Toyota Highlander Hybrid The first Toyota hybrid SUV is set to explode.
The hype around this hybrid SUV is huge and growing. Get in line now, you might be there a while (more)

We the people, must be the difference. Join the revolution, buy a hybrid car