If you're like most Americans, you are well aware that a new hybrid tax credit went into effect in 2006. More specifically, taxpayers and businesses who purchase an environment-friendly and fuel-saving hybrid are now eligible to claim up to $3,400 in federal tax credits; this made possible by the Energy Policy Act of 2005.
Earlier this year Business Know-How provided a comprehensive guide to the new hybrid tax credit in our article 2006 Hybrid Tax Credits: Enticing Incentives to Go Green. This article includes a description of the credit, eligibility criteria, and resources for completing a personal profile to determine whether or not a Hybrid purchase would make a good economic choice.
Still time in '06 to get full hybrid tax credit
Hot off the press from recent Internal Revenue Service (IRS) newswires come updates on the number of 2006 hybrids sold by specific car manufacturers, and the good news is that there is still time for purchasers of qualified vehicles this year to continue to claim the full credit.
You see, taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which a car manufacturer records its sale of the 60,000th qualifying vehicle. Once a manufacturer sells 60,000 qualifying vehicles, the tax credit begins to phase out; first to 50 percent, then to 25 percent, and finally -- no credit is allowed after the fifth quarter following the quarter in which the 60,000th vehicle is sold.
The Quarterly Report of Qualified Vehicles for the Alternative Motor Vehicle Credit for the quarter ending March 3l, 2006 shows that Ford (which owns Mercury) sold 6,192 qualifying vehicles to retail dealers. Toyota (which owns Lexus) sold 41,779 qualifying vehicles to retail dealers.
Based on these figures, it appears that Ford and Mercury hybrid purchasers will most likely be able to avail themselves of the full hybrid credit right through to the end of tax year 2006. Toyota and Lexus hybrid purchasers at the least will be able to claim the full credit until the end of the third calendar quarter, September 30, 2006.
Seven Honda vehicles now certified for hybrid tax credit
Other exciting hybrid news released by the IRS in June 2006 is that seven Honda vehicles are now certified for the hybrid tax credit. The IRS has acknowledged the certification by American Honda Motor Company, Inc. that several of its vehicles meet the requirements of the Alternative Motor Vehicle Credit as a qualified hybrid motor vehicle.
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The Honda hybrid vehicle certifications recently acknowledged by the IRS and their credit amounts are:
|Honda Civic Hybrid CVT Model Year 2006
|Honda Civic Hybrid (SULEV) MT Model Year 2005
|Honda Civic Hybrid (SULEV) CVT Model Year 2005
|Honda Insight CVT Model Year 2005
|Honda Insight CVT Model Year 2006
|Honda Accord Hybrid AT Model Year 2006
|Honda Accord Hybrid AT Model Year 2005
|*2006 Honda Accord Hybrid AT without updated control calibration qualified for a credit amount of $650.00.
Updated summary of the credit for qualified hybrid vehicles
In addition to the Honda vehicles shown above, the IRS on June 1 acknowledged the manufacturers' certifications of the following qualified hybrid vehicles and credit amounts. (Additional vehicles may subsequently be acknowledged.):
|2006 Ford Escape Hybrid Front WD
|2006 Ford Escape Hybrid 4WD
|2006 Mercury Mariner Hybrid 4WD
|2005 Toyota Prius
|2006 Toyota Prius
|2006 Toyota Highlander 2WD and 4WD Hybrid
|2006 Lexus RX400h 2WD and 4WD
|2007 Toyota Camry Hybrid
|2007 Lexus GS 450h
Updated taxpayer requirements
According to the June 2006 updated IRS Summary of the Credit for Qualified Hybrid Vehicles, taxpayers must meet the following requirements in order to qualify for the hybrid tax credit:
1. The vehicle must be placed in service after December 31, 2005 and purchased on or before December 31, 2010.
2. The original use of the vehicle must begin with the taxpayer claiming the credit.
a. The credit may only be claimed by the original owners of a new, qualifying, hybrid vehicle and does not apply to a used hybrid vehicle.
3. The vehicle must be acquired for use or lease by the taxpayer claiming the credit.*
a. The credit is only available to the original purchaser of a qualifying hybrid vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.
b. For qualifying vehicles used by a tax-exempt entity, the person who sold the qualifying vehicle to the person or entity using the vehicle is eligible to claim the credit, but only if the seller clearly discloses in a document to the tax-exempt entity the amount of credit.
4. The vehicle must be used predominantly within the United States.
*NOTE: The first line of Item #3 may give the impression that a taxpayer may claim the credit when leasing a vehicle. It is important to note that it is the leasing company that may claim the credit, not the taxpayer leasing the vehicle: This according to IRS tax law specialist John Chilgren who reports that regulations on the lease details of the hybrid tax credit are still in the process of being finalized. Chilgren suggests taxpayers keep up with hybrid tax credit updates by going to www.irs.gov and typing in the word Hybrid in their Search bar.
Americans and Detroit stepping up to the hybrid plate
"An outrageous outbreak." That's what Sales rep Paul D'Angelo of the Smithtown, New York Toyota dealership says he's witnessed in customer interest and sales of their hybrids in 2006. "Since last year, the increase in demand has doubled," says D'Angelo, "and now one out of ten customers is coming in looking for hybrids." Despite Toyota's efforts to increase production, D'Angelo says his customers have had to wait months for the Toyota Prius; a little less time for the Toyota Camry.
A Gallop poll released in April 2006 shows that most Americans say they would consider buying a hybrid car when making their next car purchase. This will be good news to Ford Motor Company. In September 2005, Ford announced it was boosting production of hybrid vehicles tenfold by 2010, when they plan to have more than half of their Ford, Lincoln and Mercury lineup with hybrid capability.
Be alert to the increasing plethora of hybrid credits and incentives
Virtually every day another hybrid incentive is added to the mix of federal, state, local and corporate offerings. Two days prior to this writing Bank of America Corporation announced that it will reimburse $3,000 to employees purchasing a new hybrid vehicle; this cash offering available to the more than 21,000 employees who live within 90 miles of Boston, Charlotte, and Los Angeles.
In light of the rise of gasoline prices in recent years, consumers have increasingly been drawn to hybrid vehicles because of the better-gas-mileage factor. Automotive information site Edmunds.com points out it is important for consumers to note other advantages as well. These include lower consumption of natural resources, longer range between gasoline fill-ups, less emissions due to smaller more efficient engines; and in some cases, lower maintenance costs.
Perhaps most important - and according to the June 2006 testimony of former Federal Reserve Board chairman Alan Greenspan to the Senate Foreign Relations Committee -- Americans can dramatically lower demand for oil by switching to more fuel-efficient hybrid vehicles, and thus significantly reduce the perils of being at the mercy of unpredictable foreign oil producers.
Copyright 2006, Attard Communications, Inc.