New Hybrid Cars: Tax Credit Information
If you’re considering buying a hybrid car or truck, you’ll be happy to know that the U.S. government offers certain tax incentives for your purchase. The Energy Policy Act provides a tax credit for those who purchase certain energy efficient vehicles. Since that act passed, it’s been up to auto manufacturers to certify to the Internal Revenue Service that certain passenger autos and light trucks qualify for the credit and the amount of the credit. All the consumer needs to do is check with their dealer. If the vehicle qualifies, the amount will be posted at the dealership, usually right on the vehicle itself.
As a buyer, you’ll need to meet certain requirements in order to declare a tax credit on your return. The requirements are basic and straightforward. Here they are for your reference:
1. The vehicle must be placed in service after 12-31-05 and purchased on or before 12-31-10, and the original use of the vehicle must begin with the taxpayer claiming the credit.
2. The credit may only be claimed by the original owner of a new, qualifying hybrid vehicle. Used vehicles do not apply.
3. The vehicle must be acquired for use or lease by the taxpayer claiming the credit.
4. The credit is only available to the original buyer. Leases don’t count as buying. In a lease situation, the leasing company can claim the credit.
5. The vehicle must be used predominantly within the U.S.
Tax Credit Phase Out
The hybrid vehicle tax credit begins to phase out when the manufacturer sells 60,000 qualifying vehicles. As an example, hybrid vehicles produced by Toyota Motor Sales USA qualify only for a lesser percentage of the tax credit. This applies to all hybrid vehicles sold by Toyota Motor Sales, which encompasses both Toyota and Lexus. Check with your dealer, but as of this writing most of these credits are 25% of the original amount.
Finally, when determining what year your tax credit can be applied, you’ll need to consider the year in which the vehicle is placed into service. Let’s use an example. Let’s suppose you purchased a qualifying hybrid vehicle on December 27, 2007 and take possession on January 5, 2008. The amount of your eligible credit can be taken for the 2008 tax year.
The purpose of these tax cuts was designed to stimulate consumer purchase of hybrid vehicles. While we expect some level of tax incentive to remain, we also predict the amounts will lessen over time. The rationale appears to be that hybrid vehicles will be much more accepted over time, thereby negating the need for tax credits.
Most customers look up the wrong hybrid car information when trying to decide on which one to buy. Hybrid cars are a different breed and as much as we wouldn't want to admit it for some reason, they do have...
The Most Important Hybrid Car InformationMost customers look up the wrong hybrid car information when trying to decide on which one to buy. Hybrid cars are a different breed and as much as we wouldn't want to admit it for some reason, they do have...
Getting The Most Important Hybrid Car InformationWhen picking out a hybrid car, many customers seem to overlook all the hybrid car information that they should be looking at. Granted, many cars manufactured at present (hybrid or not), really do sell on their looks and just how...
The Latest On 2008 Hybrid CarsEnvironmentally conscious drivers will have more hybrid car and hybrid truck options this year and next, as auto manufacturers continue to roll out new versions and models. Consumer demand for hybrid vehicles continues to increase, as consumers begin to understand...
The Pros and Cons of Hybrid CarsHybrid cars are considered to be the car of the future. Because of the benefits you will gain, you will definitely want to get one for your own. In fact, more and more people are now considering selling their conventional...