Hybrid Tax Credit

Beginning in January 2006 there is a Tax Credit instead of a deduction for certain Hybrid vehicles. For the purpose of this credit a hybrid is a vehicle that’s drivetrain uses both an internal combustion engine and a rechargeable battery. The credit is only available to the original purchaser of the vehicle. Buying a used hybrid does not qualify. The credit is based on the vehicle you buy and ranges from $250.00 to $3400.00. According to the IRS these are the vehicles and there corresponding credit as certified by the IRS.
Model Year 2007
• Chevrolet Silverado 2WD Hybrid Pickup Truck — $250
• Chevrolet Silverado 4WD Hybrid Pickup Truck — $650
• Ford Escape Hybrid 2WD — $2,600
• Ford Escape Hybrid 4WD — $1,950
• GMC Sierra 2WD Hybrid Pickup Truck — $250
• GMC Sierra 4WD Hybrid Pickup Truck — $650
• Lexus GS 450h — $1,550
• Mercury Mariner 4WD Hybrid — $1,950
• Saturn Vue Green Line — $650
• Toyota Camry Hybrid — $2,600
Model Year 2006
• Chevrolet Silverado 2WD Hybrid Pickup Truck — $250
• Chevrolet Silverado 4WD Hybrid Pickup Truck — $650
• Ford Escape Hybrid (Front) 2WD — $2,600
• Ford Escape Hybrid 4WD — $1,950
• GMC Sierra 2WD Hybrid Pickup Truck — $250
• GMC Sierra 4WD Hybrid Pickup Truck — $650
• Honda Accord Hybrid AT w/updated calibration and Navi AT w/updated calibration — $1,300*
• Honda Civic Hybrid CVT — $2,100
• Honda Insight CVT — $1,450
• Lexus RX400h 2WD — $2,200
• Lexus RX400h 4WD — $2,200
• Mercury Mariner Hybrid 4WD — $1,950
• Toyota Highlander 2WD Hybrid — $2,600
• Toyota Highlander 4WD Hybrid — $2,600
• Toyota Prius — $3,150
*2006 Honda Accord Hybrid AT and Navi AT without updated calibration qualify for a credit of $650.
Model Year 2005
• Honda Accord Hybrid AT and Navi AT — $650
• Honda Civic Hybrid MT and CVT — $1,700
• Honda Insight CVT — $1,450
• Toyota Prius — $3,150
In addition to this the credits can be reduced based on the number of hybrid vehicles sold by each individual manufacturer. The total credit is available until the manufacturer reaches its 60,000 hybrid or lean burning vehicle sold. Once that threshold has been reached the complete credit is available until the completion of the following quarter. For the 2nd and 3rd quarter after this threshold is reached the buyer can take 50% of the credit. The 4th and 5th quarter a 25% credit and then after that no credit is available.

With this being said it may be in you best interest to move quickly while the full credit is still available. As of March 31st Toyota corporation has sold over 40,000 qualifiying vehicles. While not all manufacturers are selling at this rate it does show that there is an interest in these types of vehicles. Whether or not this is the right move for you may be worth investigating further. The photos are courtesy of Earl Stewart Toyota NCD,1215 Us Highway 1, Lake Park, Florida 33403.

The information contained on this site should in no way be considered to be professional advice in the form of either tax, accounting, or legal service or consultation. You should always consult with a professional familiar with your individual circumstances before making any specific decisions related to accounting, tax, or legal matters.