Save Money On Your Taxes – Buy A Hybrid
By: Aazdak Alisimo | Posted: 28th August 2007
Although there was suspicion that the Federal Government was conspiring to prevent the introduction of alternative vehicles, the tax benies of buying a hybrid suggests otherwise.
There has been a lot of talk in the past couple of decades of a massive Government conspiracy to prevent any type of alternative vehicle from entering into mass production and replacing the conventional gasoline vehicles. The 2005 Energy Policy Act helped quell this kind of talk. Whatever was true in the past, the Federal Government showed its support for the growing Hybrid car market by offering a tax credit for purchasers of new Hybrid vehicles. The Hybrid tax credit could save a taxpayer as much as $3400.
A tax credit is superior to a tax deduction since it comes directly off the amount of tax owed. A deduction simply reduces the tax liability based on the tax rate of the individual taxpayer. This makes the Hybrid Tax Credit very lucrative and a great incentive to the tax payer to purchase a qualified Hybrid vehicle. The fact that the Hybrid vehicle was going to result in a great deal of savings due to their exceptional gas mileage made a tax credit icing on the savings cake.
The Hybrid Tax Credit applied to the purchase of new Hybrid vehicles. Used vehicle transactions were not eligible for the credit. The amount of the credit varied depending on the vehicle. The automakers were responsible for submitting the information necessary to establish the vehicles eligibility and to determine the amount of the credit. This information was passed on to the consumer at the time of the purchase enabling him to claim the credit on his individual return.
The time restrictions of the Hybrid Tax Credit stated that the vehicle had to be put into service after 12-31-05 and purchased before 12-31-10. There were a few other conditions. The vehicle had to be used primarily in the United States. Also, the credit would begin to be phased out by gradual reductions when a particular model had reached 60,000 sales. So, far two models have reached this mark and the credits in subsequent years will be reduced.
The inclusion of a Hybrid Tax Credit in the 2005 Energy Policy Act shows that the Federal Government has recognized the need to reduce gasoline dependence. It is not often that a tax credit is available for doing something that is as beneficial to the taxpayer as the purchase of a Hybrid vehicle. It is much more common that tax credits are used to encourage activities that are in the best interest of society as a whole, but involve a sacrifice by the individual.
Aazdak Alisimio writes about tax incentives for hybrid cars at HybridCarDealerDepot.com.
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Tags: tax liability, tax credit, hybrid vehicle, hybrid vehicles, hybrid car, gas mileage, time restrictions, car market, tax deduction, mass production, automakers, tax payer, energy policy act