How to Get a Tax Credit for a Hybrid Car
Saving the environment while putting money back in your pocketbook sounds too good to be true. The Alternative Motor Vehicle Credit came as a result of the 2005 Energy Policy Act. Beginning with the 2006 tax year, taxpayers who buy a hybrid car receive up to a $3,150 tax credit. Follow these steps to get a tax credit when you buy a hybrid car.
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Instructions
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Understand that hybrid car tax credits are based on the estimated fuel economy that is calculated by the Fuel Economy credit on fuel usage for weight and a Conservation credit on fuel effectiveness. The more economical a hybrid is, the greater the tax credit.
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Move quickly because manufacturers of hybrids can sell 60,000 hybrid vehicles at the full credit, after that the amount is gradually phased out. This means that you can expect the more popular cars like the Toyota Prius to be the first hybrids without a tax credit.
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Explore other hybrid vehicles if the one you want no longer qualifies for a tax credit. You'll find more than 40 hybrid models on the marketplace.
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Go to the Internal Revenue Service website at IRS.gov and search for "qualified hybrid vehicles." This regularly updated newsroom information tells you what cars qualify and for how much.
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Get busy because federal tax credits for hybrid cars expire in 2010.
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Learn whether you are subject to the Alternative Minimum Tax. If so, you can't take the credit.
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Check with your state tax bureau about hybrid car incentives. States like Colorado also offer state tax credits for purchasing a hybrid car.
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Tips & Warnings
This tax credit works with any alternative fuel vehicle, not just hybrids.
See if your employer offers incentives for buying a hybrid. Some people who work for Google have benefits from financial incentives.
Hybrid car tax credits only apply to the first owner of the vehicle. Resales won't result in a tax credit.
