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Prius Tax Credit Set to Decline

By Joe Benton
ConsumerAffairs.com

August 22, 2006

• Honda Plans New Hybrid for Earth Day 2009 • Hybrid Technology a Presidential Campaign Issue • Hybrid Parking Perk Under Fire in Los Angeles • Tax Credit for Honda Hybrids Dwindles • Honda Civic GX Natural Gas Car Tops Greenies' List • D.C. Auto Show Goes Green • Iowa Testing Hybrid School Buses • Hybrids Star at Detroit Auto Show • How Green Can Your Drive Get? • Hybrid Universe Expanding Rapidly • ExxonMobil Claims New Hybrid Battery Technology • Honda Hybrid Tax Credit Fades Away • Diesels, Hybrids Top RAND Study • Cadillac Touts Huge Green SUV Machine • Next Generation Prius to Stick with Nickel-Hydride Power • Honda Plans Prius-like Hybrid • Hybrid Cop Cars for Aspen • Chrysler Plans Hybrid Unit • Lithium Ion Batteries to Power Mercedes Luxury Hybrid --- • More ...

Toyota buyers in search of hybrid tax credits need to hurry along to the dealership before the federal incentives begin to disappear.

Toyota and its Lexus division have now sold 60,000 hybrids this year and that means consumers looking for 100 percent of the tax credit on a Toyota or Lexus hybrid must complete the purchase by the end of September.

After September 30, Toyota's credit drops to 50 percent.

The Energy Policy Act of 2005 established tax credits for hybrid purchases of up to $3,400. Then things get complicated.

To receive a full tax credit, a consumer must buy a new hybrid no later than the end of the calendar quarter that occurs after the calendar quarter in which the hybrid manufacturer sold its 60,000th hybrid.

Toyota hit the magic "60,000 hybrids sold" number at the end of May. That is good news for the automaker and bad news for consumers looking for the tax break.

With the present tax law, the tax credit at Toyota will now continue to decline to 25 percent of the full credit,then disappear altogether.

Here are the tax credits for hybrid purchases as they exist now according to the Internal Revenue Service:

• 2007 Toyota Camry Hybrid -- $2,600
• 2005 Toyota Prius -- $3,150
• 2006 Toyota Prius -- $3,150
• 2006 Toyota Highlander Hybrid -- $2,600
• 2007 Lexus GS 450h -- $1,550
• 2006 Lexus RX 400h -- $2,200
• 2006 Ford Escape Hybrid FWD -- $2,600
• 2006 Ford Escape Hybrid 4WD -- $1,950
• 2006 Mercury Mariner Hybrid 4WD -- $1,950
• 2005 Honda Insight CVT -- $1,450
• 2006 Honda Insight CVT -- $1,450
• 2005 Honda Civic Hybrid MT and CVT -- $1,700
• 2006 Honda Civic Hybrid CVT -- $2,100
• 2005 Honda Accord Hybrid AT with Navigation -- $650
• 2006 Honda Accord Hybrid AT -- $1,300
• 2006 Honda Accord Hybrid AT with Navigation -- $650

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