The IRS actually did something good.
The original purchaser of a qualifying hybrid gas-electric car may deduct $2,000 for the year the vehicle is first used, if that year is before 2006. In 2006, the deduction is scheduled to drop to $500.
These vehicles qualify for the clean-fuel vehicle deduction:
· Lexus RX 400h — Model Year 2006
· Ford Escape Hybrid — Model Year 2005
· Toyota Prius — Model Years 2001 through 2005
· Toyota Highlander Hybrid — Model Year 2006
· Honda Insight — Model Years 2000 through 2005
· Honda Civic Hybrid — Model Years 2003 and 2005
· Honda Accord Hybrid — Model Year 2005
We got the $2000 tax deduction for our MY02 Blue Moon Pearl Prius. The deduction was instituted before any modern hybrids existed and the IRS was waffling over whether the Clean Fuel deduction applied to hybrids. Congress continued the deduction without raising it and clarified it for hybrids. This is NOT a tax credit and thus amounts to hundreds of dollars in incentives.
What will be interesting is whether the mild hybrids coming from GM, which are not really hybrids, will get this deduction.
However, many states have tax credits that are much larger. Anyone interested should consult their own state.
Hal C.
Different states may offer perks for hybrid drivers. For example, in VA, hybrid drivers can drive in HOV lanes without having the requisite number of passengers.
Wow. I like that.
In Colorado you get a substantial tax CREDIT.
2005 Toyota Prius: Tax Credit available $3,434
2005 Honda Insight (Manual 5-speed): Tax credit available $4,181
2005 Honda Civic Hybrid (Manual 5-speed): Tax credit available $2,156
The price difference between Civic models (hybrid versus regular) is about $20,415 versus $16,125, so the credit essentially makes them the same.
http://www.revenue.state.co.us/fyi/html/income09.html