Tax Rebates Available for Hybrid and Plug-In Hybrid Vehicles
If you purchased a qualifying hybrid car, diesel or dedicated alternative fuel vehicle (AFV) in 2008-2009, you may be eligible for a federal income tax credit of up to $3,400 for hybrids and diesels, or $4,000 for AFVs. Currently, the only commercially available vehicles that qualify as AFVs are compressed natural gas (CNG) vehicles.
Many people may not be aware of this given the recent emphasis on the "Bank Bailout" catastrophe, but provisions which were included in H.R. 1424, the Emergency Economic Stabilization Act of 2008, both expanded and extended valuable federal tax credits for consumers who purchase fuel-efficient hybrid-electric or diesel vehicles. On October 3, 2008, President Bush signed into law new consumer tax credits for energy efficiency home improvements, as well as up to a $7,500 NEW tax credit for qualified plug-in hybrid vehicles.
Plug-in electric vehicles from General Motors and Toyota are not expected to hit showrooms for more than a year, but when they arrive, the first buyers will be eligible for a tax credit that could reach $7,500. Toyota Motor Corp.'s plug-in hybrid is expected in showrooms in late 2009, and GM's Chevrolet Volt, an extended range plug-in electric car, is due in late 2010. General Motors Corp. is also introducing a plug-in version of the Saturn Vue in 2010, and Nissan Motor Co. plans to bring an electric vehicle to the U.S. by 2010. Under the new law, plug-in electric cars with at least a 4-kilowatt-hour battery pack will be eligible for a $2,500 credit, with an additional $417 for each additional kilowatt-hour of battery capacity, up to $7,500. GM expects the Volt will merit the maximum credit. Stay tuned to the website for updates on plug-in hybrid tax credits, as until these vehicles are formally qualifed by the government the tax credit amounts each will qualify for is merely speculation.
The following requirements must be met to claim the credit for hybrid or plug-in hybrid vehicles:
- The original use of the vehicle commences with the taxpayer.
- The vehicle is acquired for use or lease by the taxpayer, and not for resale. (The credit is only available to the original purchaser of a new, qualifying vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.)
- The vehicle is used mostly in the United States.
- The vehicle must be placed in service by the taxpayer after December 31, 2005 and must be purchased on or before December 31, 2010.
Tax Credit Chart for Hybrid Vehicles
The following Table summarize tax credits for hybrids purchased or placed into service after December 31, 2005. These makes, models and years may be eligible for a federal income tax credit of up to $3,400. The hybrid incentives, which have given buyers tax breaks of up to $3,150, begin phasing out after an individual automaker sells 60,000 hybrids. Toyota reached that benchmark in late 2006 because of the success of the Prius, and Honda Motor Co. surpassed it earlier this year.
| Hybrid Vehicle Manufacturer & Model | Full Credit Effective | 50% Effective Credit | 25% Effective Credit | 0% Credit Effective |
|---|---|---|---|---|
| FORD MOTOR COMPANY | JANUARY 1, 2006 | TBD | TBD | TBD |
| 2009 Ford Escape Hybrid 2WD | $3,000 | |||
| 2009 Ford Escape Hybrid 4WD | $1,950 | |||
| 2008 Ford Escape Hybrid 2WD | $3,000 | |||
| 2008 Ford Escape Hybrid 4WD | $2,200 | |||
| 2005-07 Ford Escape Hybrid 2WD | $2,600 | |||
| 2005-07 Ford Escape Hybrid 4WD | $1,950 | |||
| 2009 Mercury Mariner Hybrid 2WD | $3,000 | |||
| 2009 Mercury Mariner Hybrid 4WD | $1,950 | |||
| 2008 Mercury Mariner Hybrid 2WD | $3,000 | |||
| 2008 Mercury Mariner Hybrid 4WD | $2,200 | |||
| 2006-07 Mercury Mariner Hybrid 4WD | $1,950 | |||
| 2008 Mazda Tribute Hybrid 2WD | $3,000 | |||
| 2008 Mazda Tribute Hybrid 4WD | $2,200 | |||
| GENERAL MOTORS | JANUARY 1, 2006 | TBD | TBD | TBD |
| 2008 Chevrolet Malibu Hybrid | $1,300 | |||
| 2008 Chevrolet Tahoe Hybrid (2WD & 4WD) | $2,200 | |||
| GMC Yukon 1500 Hybrid (2WD & 4WD) | $2,200 | |||
| 2008 Saturn Vue Green Line | $1,550 | |||
| 2007 – 08 Saturn Aura Green Line | $1,300 | |||
| 2007 Saturn Vue Green Line | $650 | |||
| 2006 – 2007 Chevrolet Silverado Hybrid | $2,200 | |||
| 2006 – 2007 GMC Sierra Hybrid | $2,200 | |||
| HONDA | JANUARY 1, 2006 - DEC. 31, 2007 | JANUARY 1 – JUNE 30, 2008 | JULY 1 – DEC. 31, 2008 | JANUARY 1, 2009 |
| 2006 – 2008 Civic Hybrid CVT | $2,100 | $1,050 | $525 | $0 |
| 2006 – 2007 Accord Hybrid AT & Navi AT (w/ updated control calibration) | $650 | $650 | $325 | $0 |
| 2006 Accord Hybrid AT & Navi AT (w/o updated control calibration) | $2,200 | $325 | $162.50 | $0 |
| 2005 – 2006 Insight CVT | $1,450 | $725 | $362.50 | $0 |
| 2005 Accord Hybrid AT & Navi AT | $650 | $325 | $162.50 | $0 |
| 2005 Civic Hybrid (SULEV) MT & CVT | $1,700 | $850 | $425 | $0 |
| NISSAN | JANUARY 1, 2006 | TBD | TBD | TBD |
| 2007 – 2008 Altima Hybrid | $2,350 | |||
| TOYOTA | JANUARY 1 – SEP. 30, 2006 | OCTOBER 1, 2006 – MARCH 31, 2007 | APRIL 1 – SEP. 30, 2007 | OCTOBER 1, 2007 |
| 2005 – 2008 Prius | $3,150 | $1,575 | $787.50 | $0 |
| 2007 – 2008 Camry Hybrid | $2,600 | $1,300 | $650 | $0 |
| 2006 – 2008 Highlander Hybrid (2WD & 4WD) | $2,600 | $1,300 | $650 | $0 |
| 2006 – 2008 Lexus RX400h (2WD & 4WD) | $2,200 | $1,100 | $550 | $0 |
| 2008 Lexus LS 600h | N/A | N/A | $450 | $0 |
| 2007 Lexus GS 450h | $1,700 | $775 | $387.50 | $0 |
Additional Information
The list of eligible vehicles is available at http://www.fueleconomy.gov/feg/tax_hybrid.shtml.
For hybrids acquired for personal use, report the credit from Form 8910 on the appropriate line of your Form 1040, U.S. Individual Income Tax Return.
Some state and local governments also provide incentives for hybrids. Check with your state or local government or view the U.S. Department of Energy's list of State & Federal Incentives & Laws. Another good source for identifying these is the Database of State Incentives for Renewables and Efficiency.