Tax credits are much better than tax deductions because the amount is
deducted directly from your tax bill, not your income. So if your tax
bill is $5,000 and you buy a Prius, you could deduct $3,150 from your
tax bill. You would owe only $1,850.
But it gets better than saving money on your taxes. The reason the
Toyota Prius gets such a large tax credit is because it so fuel
efficient. So as gas prices continue to rise, you can potentially save
more money. Again, check with your tax man first before you decide. He
may also know about state credits or deductions or other savings
options.
We have compiled a list of cars and tax credits. The higher the tax
credit, the more fuel efficient the car is compared to other cars in its
class.
Here is a list of the tax credits offered by the IRS:
2005 Toyota Prius — $3,150
2006 Toyota Prius — $3,150
2006 Toyota Highlander 4WD Hybrid — $2,600
2006 Toyota Highlander 2WD Hybrid — $2,600
2007 Lexus GS 450h — $1,550
2007 Toyota Camry Hybrid $ 2,600
2006 Lexus RX400h 2WD — $2,200
2006 Lexus RX400h 4WD — $2,200
2006 Ford Escape Hybrid Front WD — $2,600
2006 Ford Escape Hybrid 4 WD — $1,950
2006 Mercury Mariner Hybrid 4 WD — $1,950
2005 Honda Insight CVT — $1,450
2006 Honda Insight CVT — $1,450
2005 Honda Civic Hybrid MT and CVT — $1,700
2006 Honda Civic Hybrid CVT — $2,100
2005 Honda Accord Hybrid AT and Navi AT — $650
2006 Honda Accord Hybrid AT w/updated calibration and Navi AT w/updated
calibration — $1,300. The 2006 Honda Accord Hybrid AT and Navi AT
without updated calibration qualify for a credit of $650.
2007 Toyota Camry Hybrid $ 2,600
2007 Lexus GS 450h $ 1,550
2006 Ford Escape Hybrid Front WD $2,600
2006 Ford Escape Hybrid 4 WD $1,950
2006 Mercury Mariner Hybrid 4 WD $1,950
