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Tax Deductions and Credits make the Hybrid Cars More Appealing

November 22nd 2005

Tax Deductions and Credits make the Hybrid Cars More Appealing

Toyota Prius

Anyone buying a car should consider all of their options.  Should they concern themselves with gas mileage or do they have a large family and need a large vehicle?  If you have a long commute and drive solo or with a coworker to work, you should consider the hybrid option.

Why are hybrids becoming so popular?  There are a number of reasons.  First the carmakers have figured out how to capitalize on their efficiency. Toyota developed a very efficient technology, patented it, and now licenses it Ford Motor Co and Nissan Motor Corp. 

There is another big advantage to the hybrid: You donít need to plug it in.  The car charges itself and even uses the braking system to produce electricity to charge the batteries.  You donít need special filling stations like you would if you owned a car run on natural gas or hydrogen.  Hybrid cars could be the wave of the near future.

 

Letís get back to the long commutes.  If you have a long commute the hybrids will perform just like regular gas motors except you will need less gas to run them. This will save you money.  Some motorists, depending on the commute, could save $1000 or more per year using the hybrid.

Hybrids do cost more.  They may cost you an extra $3000.  So if you can save $1000 a year on gas it would take you as little as three years to break even on your investment. 

Currently hybrid purchasers can get a $2,000 tax deduction on their taxes.  This means if you make $60,000 taxable income per year you will only be taxed on $58,000.  You may save a few bucks on your taxes.

Tax deductions are not as good as tax credits.  Starting January 1st Congress has increased the incentive for Americans to buy hybrid cars by offering a tax credit.  This means if you get a $2,000 tax credit you will save $2,000 on your taxes.  So if your tax bill comes to $10,000 you will only have to pay $8,000.

 

The details have not been worked out and it is likely to vary from model to model.  The more fuel efficient the hybrid is the larger the tax credit.   Michelle Mahfoufi of the Shreveport Times reports that the American Council for Energy Efficiency (ACEEE) estimates the savings will range from $650 on the Accord to $3,150 on the Prius. 

Honda may have made a less polluting vehicle but Toyota with their Prius has made a more fuel efficient one.   This may change the strategy of the automakers.  They may consider fuel efficiency more important than low emissions.  Either way, when shopping for a hybrid, compare the gas mileages and bring your calculator.

Related Articles:

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By Dan Wilson
Best Syndication Staff Writer

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Copyright 2005 Best Syndication                                            Last Updated Saturday, July 10, 2010 09:45 PM