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2008 Hybrid Tax Credit Update

Posted By Jim On 06/10/2008 @ 9:07 am In Cars | 3 Comments

The Energy Act of 2005 [3] ushered in new tax credits for the purchase of hybrid cars and light trucks, offering up to $3400 in tax credits for qualifying vehicles purchased after December 31st, 2005 (the act expires in 2010). A credit would be set for each vehicle and, once 60,000 were sold, the credit would be phased out. Once the cap is met, the full tax credit is available for purchases in that quarter and the following quarter. Then, the credit is reduced to 50% for two quarters, then to 25% of the credit for two quarters. Then it’s reduced to zero.

Since the 60,000 count is on all hybrid vehicles, rather than a running count on model, the limit applies to manufacturers. Here’s where all the auto manufacturers stand with respect to that limit according to the IRS (in order of estimated vehicles sold).

  • Toyota: (0% Credit) – Six months after the act was enacted, Toyota met it’s 60,000 vehicle cap and the credit is no longer available. [IRS announcement [4]]
  • Honda: (50% Credit)Honda is currently in the 50% credit phase through June 2008. On Feb 22nd, the IRS announced that Honda met it’s 60,000 vehicle cap in the fourth quarter of 2007. That sets the expiration schedule at 50% credit through June 2008 and 25% credit from July 2008 through December 2008. The credit expires at the end of the 2008 calendar year. [IRS announcement [5]]
  • Ford: (100% credit) – As of August 6th, 2007, Ford has sold 33,547 hybrid vehicles, no additional IRS guidance has been released on their sales since. [IRS announcement [6]]
  • General Motors: (100% credit) – As of March 31th, 2007, GM has sold 8,485 hybrid vehicles, no additional IRS guidance has been released on their sales since. [IRS announcement [7]]
  • Nissan: (100% Credit) – As of August 6th, 2007, Nissan has sold 7,849 hybrid vehicles, no additional IRS guidance has been released on their sales since. [IRS announcement [8]]

Additional Resources

  • IRS News Releases: If you want to keep up with the most recent IRS releases regarding hybrid vehicles, keep your eye on this list of releases [9]. They generally report new certifications of vehicles and any sales figures.
  • Phaseout & Credit Information: Fueleconomy.gov [10] has a useful dynamic table that lists the phaseout and credit information for each vehicle.

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[2] Email: mailto:?subject=http://www.bargaineering.com/articles/2008-hybrid-tax-credit-update.html

[3] The Energy Act of 2005: http://www.eere.energy.gov/afdc/incentives_laws_epact.html

[4] IRS announcement: http://www.irs.gov/newsroom/article/0,,id=162562,00.html

[5] IRS announcement: http://www.irs.gov/newsroom/article/0,,id=175828,00.html

[6] IRS announcement: http://www.irs.gov/newsroom/article/0,,id=172857,00.html

[7] IRS announcement: http://www.irs.gov/newsroom/article/0,,id=169883,00.html

[8] IRS announcement: http://www.irs.gov/newsroom/article/0,,id=169952,00.html

[9] list of releases: http://www.irs.gov/newsroom/article/0,,id=161076,00.html

[10] Fueleconomy.gov: http://www.fueleconomy.gov/feg/tax_hybrid.shtml

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