Hybrid Car Tax Credit - Facts & Information

MAIN Your Money Taxes Go Hybrid

For A Clever Tax Deduction, Go Hybrid

Laws put in place by the Energy Act of 2005 provides savings for those who have - or are about to - buy a hybrid or energy-saving car or light truck.

Now officially on the books, these tax breaks went into effect in January 2006.

The catch? The allowable credit will be reduced as more hybrids are sold with the IRS promising to reevaluate the new provision in 2010.

During the next several years this means buyers can see a potential savings into the thousands, depending upon what hybrid vehicle they choose and its recognized fuel efficiency ratings.

Below, check out estimated savings on popular makes and models provided by the American Council for an Energy-Efficient Economy :

Hybrid Vehicles	Class	City MPG	Gallons Saved	Tax Credit
Chevrolet Silverado (2WD)	Pickup Truck	18	1,393	$250
Chevrolet Silverado (4WD)	Pickup Truck	17	1,622	$650
Ford Escape (2WD)	Compact SUV	36	3,155	$2,600
Ford Escape (4WD)	Compact SUV	33	2,907	$1,950
Honda Accord	Midsize Car	25	1,697	$650
Honda Civic	Compact Car	49	2,348	$2,100
Honda Insight (auto)	Compact Car	57	1,498	$1,450
Lexus RX (2WD)	Premium Midsize SUV	33	3,557	$2,600
Lexus RX (4WD)	Premium Midsize SUV	31	3,316	$2,200
Mercury Mariner	Compact SUV	33	2,907	$1,950
Toyota Highlander (2WD)	Midsize SUV	33	3,557	$2,600
Toyota Highlander (4WD)	Midsize SUV	31	3,316	$2,200
Toyota Prius	Compact Car	60	2,744	$3,150

To stay completely up-to-date on the current allowable credit, simply bookmark the IRS Hybrid Cars and Alternative Motor Vehicles page from the IRS, illustrating the latest models and their corresponding credit allowances together with related tax tips and news releases.

You may also want to consult with a trusted car dealer or a tax expert to see how you can best take advantage of the new provisions.

Hopefully, the new incentives will result in even more fuel-efficent cars on the road - thanks to clever hybrid car owners who not only can save money at the pump, but at tax time as well.

Related Links:

New Energy Tax Credit for Hybrids

Harnessing hybrid-car tax credits

Hybrid Cars & Vehicles Buyer Reports

Also see related article -> Rise of the Hybrid Car

Also see in Taxes -> Tax Forms & Instructions by U.S. State

1040, 1040 EZ & Other IRS Tax Forms | Tax Schedules

Tax Filing Tips | How to Avoid an IRS Audit