Dec 31 2011
The Tax Benefits Of Hybrid Vehicles – What’s In It For You?
No longer do young people want to become rich enough to own a Caddy — they now want to own a hybrid car and “go green” the trendy way. It’s a boon to the planet, a boon to your bank account, a boon to your status as being hip and trendy with the latest wheels. There are many tax benefits of hybrid vehicles, as you will find out in this article.
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.
But hey, wait a minute Mr. Postman — don’t get all too giddy before you fully understand the inner machinations. Not every “hybrid” qualifies for hybrid tax relief programs, and the rules herein can be quite convoluted and difficult to understand for the common man.
If a car has both a gas engine and electric engine, then it is termed as a full on hybrid vehicle. For example, the Toyota Prius is considered to be a full on hybrid. But there are other vehicles that are purportedly hybrids, but are not classified as such by the government. This is because these vehicles do nothing more than shut off their engines when at idle; due to this lack of hybrid functionality, they don’t quite ‘cut the mustard’ as hybrid vehicles.
Also, it would only be the first 60,000 cars sold by the auto maker that would qualify for complete tax credit. The amount of the credit would then go down thereafter. So if you want to be able to take the full tax credit you need to be buy early. And for those thinking about leasing — no, that won’t get you a tax credit.
The latest wave of tax incentive programs are far more comprehensive than the old programs that were once implemented. For the exact amount and rules you need to contact the IRC, but ACEEE has provided the following estimates to give you an idea of the tax benefits you might reap.
For starters, the Toyota Prius would normally qualify for the full $3,400 tax credit, and among hybrids, it is alone in holding this honorific. A $2600 credit goes to the Ford Escape 2WD, Honda Insight, and Toyota Highlander 2WD. Next up, there are three vehicles, the Lexus RX400H, Honda Civic Auto Transmission and Toyota Highlander 4WD where you can get a $2,200 tax credit. A $1950 credit goes to the Ford Escape 4WD and Honda Civic Manual Transmission. You can get a $1,300 tax credit for the Lexus GS450H, Nissan Altima and Toyota Camry. Unfortunately for owners of a Honda Accord, GMC Sierra or Chevy Silverado, the credit earned would be less than $1,000.
Bear in mind, though, that those numbers are mere estimates. You will need to contact the IRS for the exact numbers, or you will have to wait some time before the actual numbers are released.
The basics for being able to take the credit are as follows: you must purchase the vehicle new and it cannot be for re-sale. Sounds easy enough, but as would always be case, there will always be some caveats, so make sure you read the fine print because you wouldn’t want THAT to put a damper on your plans to get a tax break.
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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