New Tax Credit Numbers for Hybrid Vehicles - Savings
Breakdown by the Car and How much you will save
January 23rd 2006
Tax credits for
hybrid cars and other fuel-efficient cars took effect January 1st.
The tax credits will vary according to the car you buy, and this can
cause some confusion, but it can benefit you to figure it out. The
goal of the federal government is to encourage the purchase of fuel
efficient (green) vehicles.
If you purchased
a hybrid vehicle last year you should check with your tax man to see
if you qualify for a tax deduction. But if you buy a hybrid car
this year you will receive a tax “credit” that will likely save you
much more money. The credit is deducted directly from your tax bill
and not just from your income.
There are two
elements that the new tax credit is based on. The first element
considers the fuel savings of the hybrid compared to the same style
non-hybrid vehicle. The second element is based on the estimated
lifetime fuel savings.
The tax credits
are not as straight forward as you would think. You will need to
talk to your car dealer and maybe even your tax preparer to figure
out the exact amount saved. The manufacturers have come up with
some numbers though.
Ford says you
will be able to save $2,600 for a two-wheel-drive version of their
Mercury Mariner Hybrid. You will likely save $1,950 for their
four-wheel drive models.
you will save $2,100 for their Honda Civic Hybrid. The Honda
Insight with automatic transmission will likely save you $1,450 and
the Accord Hybrid will save you $650.
According to the
American Council for an Energy-Efficient Economy website you will be
able to save $3,150 on the Toyota Prius. You need to act quickly on
this model because there are a limited number of tax credits per
manufacturer. The Federal Government will allow each car maker a
total of 60,000 tax credits. The Prius (Toyota) is expected to sell
out first, according to some experts.
There may be some
sort of tax credit after the first 60,000 tax credits, but it will
likely be much smaller. These are tax credits so you will not see
the savings until you file your taxes in 2007.
Best Syndication Staff Writer
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