Being the owner of a hybrid car is the ultimate status symbol in today’s Earth-friendly paradigm. It not only helps Mother Earth, it also helps your wallet stay fat and healthy. Here are some factoids on the tax benefits of hybrid vehicles.
The US government has realized that it would be the perfect gambit — offering tax incentives to drivers to encourage them to somehow do something to protect the environment.
However, before going “WOW” on all these tax perks, you must make sure you know what you’re getting into. It is a bit complex and not all vehicles that call themselves hybrids actually qualify for the hybrid tax relief programs.
A full on hybrid would have both a gas engine and an electric engine inside of it. One such example of a full on hybrid is the Toyota Prius. However, take note that some types of hybrid vehicles are not considered hybrids by the government, even if they are advertised as such. The reason being; these vehicles simply shut the engine off when idling, and this isn’t sufficient for them to be classified as hybrids.
In addition, take note that only the first 60,000 buyers of the hybrid model would qualify for full tax credit. After that, the amount of the credit goes down. If you want to take advantage of the complete tax credit, then the thing to do is buy early. Be aware that leasing doesn’t qualify for a tax credit.
Compared to the older tax incentive programs, the newer programs since introduced have more value to consumers. You will, however, need to contact the IRS for more specific information (such as the amount and some stipulations), but our friends at the ACEEE have released some estimates which could give you a fairly good ballpark of tax estimates.
The Toyota Prius should qualify for the full $3400 tax credit, and it’s the only hybrid to earn this honor. Three vehicles, the Ford Escape 2WD, Honda Insight and Toyota Highlander 2WD qualify for a $2,600 credit. Three vehicles — the Lexus RX400H, Honda Civic Auto Transmission and Toyota Highlander 4WD — qualify for a credit of $2,200. You can get a credit of $1,950 if you own either a Ford Escape 4WD or a Honda Civic Manual Transmission. The Lexus GS450H, Nissan Altima, and Toyota Camry all have a $1300 tax credit. The Honda Accord, GMC Sierra, and Chevy Silverado all get under $1000.
Remember, these are estimates. The actual numbers can only be gleaned from the IRS, or you can wait some time before they are released.
Here are the general rules if you want to take advantage of the credit: number one, the vehicle must be purchased brand new and number two, you cannot put it up for re-sale. That’s pretty simple but there are some other areas that aren’t so clear so be sure you get the details on “all” the rules.
The tax benefits of hybrid vehicles are definitely improving. Have your accountant or bookkeeper find out what your personal options are and take advantage of any tax breaks you can!
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