How Much is a Hybrid Tax Credit?
Update Feb 2011: the Hybrid Tax Credit has now finished as of 31 Dec 2010. Electric Vehicles now offer a federal tax credit of up to $7,500, see our sister site here for electric car prices.
It’s tax time again. I should know! At this time of year I live and breath tax returns. Yes, I’m a CPA. So, this is my niche of expertise. I’m sure most of you have heard of the tax credits given to hybrid car owners, but you might be wondering how much the tax credit is for? The answer is, it depends on what kind of hybrid vehicle you own.
The I.R.S Publication 17, for use in preparing 2008 tax returns gives us the following in chapter 37, page 253.
“Generally, for a qualified alternative fuel vehicle, and advanced lean burn technology vehicle, or a qualified hybrid vehicle, you can rely on the manufacturer’s (or in the case of a foreign manufacturer, it’s domestic distributor’s) certification that a specific make, model, and model year vehicle qualifies for the credit and the maximum amount of the credit for which it qualifies.”
In other words, the I.R.S is saying “don’t ask us, ask the automobile manufacturer.” This is because the more hybrid vehicles the manufacturer sells, the less amount you will receive in the form of a tax credit. Think of it as something of a rebate, only one that comes from the government.
Large rebates are used to help move cars that aren’t selling very well, and once the vehicle starts selling the rebate is reduced. The I.R.S. wants you to ask the manufacturer because they have handier access to their sales figures. To get the maximum amount of the credit, buy your hybrid early in the year. (Note: The tax credit is only good for new cars.)
Remember, year model vehicles don’t correlate release dates with actual dates. New year models generally come out in the summer of the previous year, and if the vehicle is a new design altogether, they may even come out before that. For an updated list on what vehicles receive what credit, To receive the credit, you must file I.R.S. form 8911 with your tax return. Your tax preparer should have one available, and if you file your taxes yourself, you can find the form at most post offices or you can simply download it from the internet.
Receiving a tax credit can be an incentive to buy a hybrid car, but if it’s late in the year for the model you want, and your tax credit is reduced, remember there are other good reasons to purchase a hybrid. They use less gas, which reduces our dependence on foreign oil, and they are better for the environment, of which we have only one. ]]>For more hybrid information like hybrid tax credit click