Hybrid Cars and Taxes

While purchasing a hybrid vehicle may be absolutely beneficial to some owners due to a promise of a number of benefits, namely:

1. Reduction in cost of Insurance

2. Gas and Mileage Savings

3. Tax Credit

Consumers must always be aware of any new information that could affect their decision to invest on these vehicles.

It is obvious that out of these three main benefits, tax credit is definitely the green light for these buyers to opt for Hybrids. What they do not know is that, tax credit is also subject to certain conditions which will one way or another affect them as a buyer and the vehicle as well.

Before proceeding to invest on a green car, whether as a whole or in part, it is recommended that you conduct your own research for the tax credit offered each year by the federal government, also known as the New Energy Tax Credit. Digging some further info will not only educate the consumer on the scheme, but will also give them a greater understanding of the conditions imposed on these tax credits. Conditions such as, these tax credits or incentives is not at all permanent and is in fact being subjected to discontinuation or worse, a complete phase out.

This tax incentive proved to be very rewarding to buyers of hybrid cars after December 31, 2005. Records show that about USD 2,000 tax refunds has been granted for vehicles purchased before 2006 and on one hand, vehicles purchased after December 31, 2005 were eligible to refunds as high as USD 3400, which is a remarkable difference in the amount of tax refund.

The vehicles that were covered of this tax refund were Ford Escape Hybrid, Mercury Mariner Hybrid, Mazda Tribute Hybrid, Chevrolet Malibu Hybrid, Chevrolet Silverado Hybrid, Chevrolet Tahoe Hybrid, GMC Sierra Hybrid, GMC Yukon 1500 Hybrid, Honda Accord Hybrid, Honda Civic Hybrid, Nissan Altima Hybrid, Toyota Prius, Toyota Highlander Hybrid and Toyota Camry Hybrid. The list also includes several gas-saving green vehicles that are not considered as hybrids.

Again, before investing on these vehicles, buyers must strictly take note that while these vehicles are eligible for New Energy Tax Credit scheme, buying any of these vehicles does not give them an assurance of a tax credit.

You see, tax refunds eligibility of a vehicle depends on the mark of sales each model or make has reached. For example, if the number of sales for a certain eligible vehicle has reached its maximum, only 50% of the number of vehicles specified by the Tax Credit scheme will be entitled to the incentive, this system follows once the next mark of sales is attained, this time only 25% will be entitled to the tax refund. A consumer will not be entitled to a tax refund if a maximum sales target of a certain green or hybrid car is achieved.

Furthermore, tax credits will not be rewarded to consumers for Toyota Prius, Toyota Highlander Hybrid and the Toyota Camry Hybrid, as well as several Lexus gas-saving models if purchases are made after October 1, 2007. The same applies for purchases made after January 1, 2009 for Honda Accord Hybrid and Honda Civic Hybrid.

Now, if you are really that interested to invest in Hybrid vehicles mainly due to tax refund despite the gradual discontinuation of this incentive, it will therefore be worthwhile to do your research as there are still some vehicles advised to be still eligible for tax refunds, these in particular, are the upcoming 2009 and 2010 hybrid models.

Taking some time to educate ourselves on these few points won’t cost us anything. It will in fact prove to be very useful before making a final decision. Let’s not forget we are investing our own money for these types of vehicles. Being well informed before hand could result to your main target, a good hybrid car investment plus the benefit of a tax refund which only means, MONEY.