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The Hybrid Car Tax Credit
The Energy Policy Act of 2005 replaced the
clean-fuel burning deduction with a tax credit. A tax credit is subtracted
directly from the total amount of federal tax owed, thus reducing or even
eliminating the taxpayer's tax obligation. The tax credit for hybrid
vehicles applies to vehicles purchased or placed in service on or after
January 1, 2006.The credit is only available to the original purchaser of
a new, qualifying vehicle. If a qualifying vehicle is leased to a consumer,
the leasing company may claim the credit.
Hybrid vehicles have drive trains powered by both an internal combustion
engine and a rechargeable battery. Many currently available hybrid vehicles
may qualify for the tax credit.
These models have been certified for the credit in the following amounts:
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| 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
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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 Accord Hybrid AT and Navi AT without updated
calibration - $650
- 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
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| 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
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The Hybrid Phase Out
Consumers seeking the credit may want to buy early since the
full credit is only available for a limited time. Taxpayers may
claim the full amount of the allowable credit up to the end of
the first calendar quarter after the quarter in which the
manufacturer records its sale of the 60,000th hybrid or advance
lean burn technology. For the second and third calendar quarters
after the quarter in which the 60,000th vehicle is sold,
taxpayers may claim 50 percent of the credit. For the fourth and
fifth calendar quarters, taxpayers may claim 25 percent of the
credit. No credit is allowed after the fifth quarter.
Toyota Motor Sales, U.S.A., Inc., has submitted quarterly
reports indicating that its cumulative sales of qualified
vehicles to retail dealers has reached the 60,000-vehicle limit
during the calendar quarter ending June 30, 2006. Effective Oct.
1, 2006, the tax credit amounts for certified Toyota models will
be reduced. The models and allowable credits may be found in
news release IR-2006-145, Toyota Hybrids Begins Phaseout on
October 1.
Toyota hybrid vehicles purchased before Oct. 1, 2006 qualify
for the full credit. For Toyota hybrid vehicles bought on or
after October 1, 2006, and on or before March 31, 2007, the
credit is 50 percent of the otherwise allowable credit amount.
Taxpayers buying vehicles on or after April 1, 2007, and on or
before September 30, 2007, can only get 25 percent of the
credit.
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| Credit amounts for Oct. 1,
2006 – March 31, 2007: |
- 2005 Prius - $1,575
- 2006 Prius - $1,575
- 2006 Highlander 4WD Hybrid - $1,300
- 2006 Highlander 2WD Hybrid - $1,300
- 2006 Lexus RX400h 2WD - $1,100
- 2006 Lexus RX400h 4WD - $1,100
- 2007 Camry Hybrid - $1,300
- 2007 Lexus GS 450h - $775
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| Credit amounts for April 1,
2007 – September 30, 2007: |
- 2005 Prius - $787.50
- 2006 Prius - $787.50
- 2006 Highlander 4WD Hybrid - $650
- 2006 Highlander 2WD Hybrid - $650
- 2006 Lexus RX400h 2WD - $550
- 2006 Lexus RX400h 4WD - $550
- 2007 Camry Hybrid - $650
- 2007 Lexus GS 450h - $387.50
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| Beginning October 1, 2007,
taxpayers who buy a Toyota hybrid cannot claim the related tax
credit. |
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