Originally published November 28 2005
Tax credit designed to motivate hybrid manufacturing
by Mike Adams, the Health Ranger, NaturalNews Editor
The tax credit available to consumers who purchase hybrid-electric vehicles only applies to the first 60,000 hybrid vehicles each manufacturer sells.
Consumers may soon have greater urgency to buy a hybrid gas-electric vehicle, and not just because of higher gasoline prices.
The federal tax break on hybrid models changes from a deduction to a tax credit Jan. 1.
Though the amounts of the credits haven't been determined, many consumers will stand to benefit from the new rules.
But it may pay to buy early because only the first 60,000 hybrid vehicles that each manufacturer sells are eligible for the full benefit.
Once a manufacturer sells those 60,000, the tax credit phases out within about 18 months.
"If you're thinking that the tax credit should encourage other manufacturers to get into the race, then it works," said Therese Langer of the American Council for an Energy Efficient Economy.
Eligible vehicles are the Toyota Prius, Honda Insight, Lexus RX400h and hybrid versions of the Ford Escape, Honda Accord and Civic and Toyota Highlander.
The value of the deduction depends on which tax bracket a person is.
For someone in the 33 percent bracket, it is $660.
Taxpayers can claim the one-time deduction whether they itemize or take the standard deduction.
Starting Jan. 1, the break on hybrids becomes a tax credit, with the entire amount deducted from the amount a taxpayer owes.
The Internal Revenue Service has yet to issue regulations on the tax credits, but the American Council for an Energy Efficient Economy (ACEEE) estimates they will range from $3,150 on the Prius to $650 on the Accord.
The final word will come from the IRS, but it won't publish regulations on the credit until the end of this year and would not comment.
"We're not in the business of advising consumers on car purchases," she said, declining further comment.
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