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What are the tax incentives for hybrid owners?

The new tax credits for 2006 are out for hybrid owners. These new full dollar tax credits for hybrid cars took effect on January 1, 2006. The new incentives are much better than any incentive programs in the past with these being a reduction of taxable income.

Not only are there tax incentives at the federal level but many states are also joining in the fun and giving out tax incentives to hybrid owners. If you do not understand the formula that you have to use to figure out your tax credit, the I.R.S will be able to aid you those figures.

From the American Council for an Energy Efficient Economy has given the following estimates to help you better understand what these tax incentives really mean in dollars and cents.

For models already on the market, you can receive a tax credit as follows:
Honda Accord Hybrid $650, Honda Civic Hybrid – manual $1,700, Ford Escape Hybrid – 4 wheel drive $1,950, Mercury Mariner Hybrid $1,950, Honda Civic Hybrid – automatic $2,100, Lexus RX400h $2,200, Toyota Highlander Hybrid – 4 wheel drive $2,200, Ford Escape Hybrid – 2 wheel drive $2,600, Honda Insight – automatic $2,600, Toyota Highlander Hybrid – 2 wheel drive $2,600, and Toyota Prius $3,150.

Tax incentives for models not out yet and only based on specifications from the manufacturers the estimated tax credits are:
Chevrolet-GMC Silverado-Sierra $250, Toyota Camry $1,300, Lexus GS450h $1,300, and Nissan Altima $1,300.

These are only estimates of the new tax credits but a good idea of what incentives are available from the Federal Government. There are of course rules from the I.R.S. before you can receive any tax credits on your new hybrid car, which include:
You must buy the hybrid car before or after January 1, 2006, you cannot purchase a used hybrid car, and you must purchase the car for your own personal use and not for selling.

From here is gets a bit confusing. There is a limit set on how many hybrid cars that are sold will get this credit. Around 60,000 hybrids from each manufacturer will be allowed to get the tax credit, but from the rule, states it is the quantities that are sent to the dealerships and not the amount sold. These credits will also vanish within a 15-month time limit. This time limit and amount of cars sold or sent to the dealership is a bit confusing but the IRS should be able to clear up any of your questions.

Each state has there own unique set of tax incentives to get you to purchase a hybrid car. Some states have ones that are better than others, according to which state you reside and the air quality of the city itself, etc… Many states are hoping that the tax incentives will get people to purchase the hybrid cars to ensure that emissions are reduced in the larger cities.

If you need to learn more about the different tax credit for hybrid cars - for the state in which you live, you can speak with hybrid dealerships, your tax accountant and of course the IRS. They are there to explain exactly what you can receive when you purchase a hybrid car.