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Hybrid Federal Tax Credit

Having acknowledged the need to turn from the overdependence on fossil fuels to more environmentally friendly sources of energy, the government has tried to encourage the production of automobiles that use alternative sources of fuel by trying to give tax incentives to any buyers of such cars. This credit has been in place for some time and is applicable to any hybrid cars purchased as from or on the 1stof January 2006.

How much tax credit is applicable for hybrid cars?

The government has setup the tax credit on hybrid cars at $3,400 for hybrids and clean diesel powered vehicles and $4,000forany vehicles using any clean alternative fuels. This incentive is however not open to all situations, there are strings attached as is common of all government incentives. In this situation, the credit is linked to a production limit of up to 60,000 units by any single auto manufacturer.

This means that once a manufacturer hits the 60,000 mark in produced hybrid vehicles, the credit incentive stops to apply on the cost of the 60,001 unit produced. Going by this criteria we can say then that Toyota and Lexus buyers are no longer eligible for the tax credit as the two have long surpassed the 60,000 mark in produced and sold units. Ford however still hasn't exhausted its 60,000 units mark and therefore the credit remains applicable. The government issues tax credit of up to a maximum of $7,500 on hybrid cars. The latest model to win the highest tax credit in the market is the Tesla Roadster which has the full $7,500

Taking into consideration the importance of the matter, the government's incentives do not stop at the purchase of new hybrids alone, instead even aftermarket conversions that transforms an ordinary gasoline car to use alternative fuels is also eligible to tax credit. This means that any company that sells vehicles fitted with this conversion kits such as Roush also have their clean energy converted automobiles being eligible for tax credit.

The government tax credit is however not applicable to any buyer of second-hand hybrid cars. The credit only applies to the original owner. It is only natural that this should be clearly stated to avoid any misconceptions. It would not make any sense to give the tax credit to second and even tenth hand owners as the government would end up making losses since you can never tell how may owners the vehicle may attract as time goes by.

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