Starting in 2006, people who buy or lease hybrid vehicles --- cars or SUVs powered by gasoline and electric engines --- will be able to get tax credits of up to $3,400.
It's included in the energy bill President Bush signed into law Aug. 8.
Not all hybrids have been approved for the credit, and how much you'll get back depends on the efficiency of the car and when you buy it.
In addition, a cap on how many hybrid purchases qualify and waiting lists for some hybrids mean you'll have to act fast.
The Internal Revenue Service (IRS) has approved seven hybrid vehicles for the tax credit: the Ford Escape, Toyota Highlander, Honda Accord, Honda Civic, Honda Insight, Lexus RX400h and Toyota Prius.
"Generally assume that the vehicles that achieve better gains in fuel efficiency are the ones that are going to be more handsomely benefited by the tax incentives," Berman said.
To get the tax credit you'll have to wait to buy the vehicle until after Jan. 1.
A "pure" hybrid, such as the Toyota Prius or Ford Escape, works better for a city driver, said Brad Berman, who runs a Web site about hybrids.
A pure hybrid is capable of running solely on its less powerful electric engine for an extended period, ideal for less-demanding stop-and-go traffic.
Hybrids may not work for you if you need a powerful engine for mountain roads or rugged terrain, said Therese Langer of the American Council for an Energy-Efficient Economy, a nonprofit energy-conservation advocacy group.
The Environmental Protection Agency fuel-economy ratings don't reflect real-world driving conditions, so no hybrid will yield as many miles of savings as listed.
A replacement can cost up to $4,000, but most automakers back their batteries for at least eight years or 80,000 miles, whichever comes first.