Tax Breaks for Hybrid Vehicles

To help reduce America’s dependency on foreign oil and the amount of emissions the country produces, tax breaks for hybrid vehicles were introduced as a purchasing incentive between 2004-2005. The initial clean-burning fuel deduction was part of the Energy Policy Act of 2005. Tens of thousands of consumers have already taken advantage of the original tax incentive and many of the original qualifying vehicles have already sold the maximum 60,000 units that qualified for the program.

Extension on Original Hybrid Tax Credit

The new stimulus bill signed into order on February 17, 2009 by President Obama extends the deductions into 2010. There are still many qualifying vehicles that can take advantage of the tax break for hybrid vehicle purchases. Qualifying vehicles are described as hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles. Specific vehicles from Ford, GM and Nissan can still be purchased and receive a tax incentive “based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models,” says energystar.gov.

How Long Will the Hybrid Tax Incentive Last?

The stimulus plan includes a new tax break for the purchase of plug-in hybrid electric vehicles (effective January 1, 2009). This deduction ranges between $2,500 and $7,500, and will apply to the the first 250,000 purchasers of these vehicles sold. The program will fade out once the limit of vehicles is reached.

If you’re thinking about purchasing a new car, specifically a hybrid, now is the best time. The government is offering tax credits and there are also incredible dealer incentives and consumer protection plans being offered by many auto manufacturers. Get yourself a low interest auto loan prior to your purchase, so that your financing is secured ahead of time, and be ready to enjoy the car shopping experience.