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Most often when considering the purchase of a new car the last thing that comes to mind is that it can actually be financially beneficial. In the case of buying a new hybrid car it can be a financially sound purchase. Since their beginning hybrid cars have been used as a tax credit. Luckily for hybrid owners who bought their car in 2006 the tax incentives have gotten even better.
Before January 1st, 2006 people who purchased hybrid cars were allowed to take a $2000 income tax deduction. After that date, the deduction became even larger. Currently the law states that a new hybrid car owner can have a tax credit anywhere from $400 to $3400 on their income taxes. All of this is due to the new energy bill recently passed.
It works in a way like a first come, first serve situation. Each manufacturer’s total available tax credit to their buyers begins to be reduced after the automaker has sold 60,000 hybrid vehicles. After the initial 60,000 have sold that manufacturer’s tax credit is slowly lowered over the course of five years. With this in mind, the interested consumer would be smart to try to purchase their hybrid as soon as possible.
The tax credit available on each hybrid is generated by the use of a calculation and two tables. The total hybrid car tax credit is determined by the Fuel Economy credit and the Conservation credit. The fuel economy credit is based on its fuel usage for its weight class. The better a certain hybrid performs in this arena the higher the credit it will be awarded.
The conservation credit is determined by how fuel effective the vehicle is. In other words it is directly related to how much gas the hybrid saves. As in the case of the fuel economy credit the higher the percentage the better the tax credit will be.
Some of the hybrid cars that have come out on top of these ratings have been the Prius and Escape Hybrid. The Prius comes to its new owner with a $3150 tax credit. That number takes a significant amount out of the original price.
Ford’s 4-wheel drive Escape Hybrid SUV is a high dollar amount as well. Its tax credit comes out to be $1950. The consumer who is considering buying a hybrid car can easily look into the current value of each models tax credit by contacting the dealership or the manufacturer directly.
The new energy bill and a new hybrid car could help keep the IRS away. The current tax credit break given to hybrid owners may just be the thing to put this form of new technology in the forefront of the minds of American car buyers.
Purchasing a new hybrid not only helps with the rising cost of gas and the danger to the environment, but also is an excellent resource for deferring the cost with the tax credit. The hybrid car tax credit is an incentive few people would want to miss.