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The Energy Policy Act of 2005 provides a
credit for taxpayers who purchase certain energy efficient
vehicles, including Qualified Hybrid vehicles.
Hybrid vehicles have drive trains powered by both internal
combustion engine and a rechargeable battery.
Generally for qualified hybrids, a taxpayer may rely on the
manufacturer’s certification that a specific make, model and
model year vehicle qualifies for the credit and the amount of the
credit for which it qualifies.
The credit is only available to the original purchases or a
new, qualifying vehicle. If
a qualifying vehicle is leased to a consumer, the leasing company
may claim the credit.
Three examples of 2009 Model Year Hybrid Vehicles (as of
3-19-2009):
|
Make
|
Model
|
Credit
Amount
|
|
Cadillac
|
Escalade Hybrid 2WD
|
$2,200
|
|
Ford
|
Escape Hybrid 2WD
|
$3,000
|
|
GMC Sierra
|
C15 2WD Hybrid
|
$2,200
|
NOTES:
- Honda
vehicles purchased during 2008 qualify for a reduced credit
- Honda
vehicles purchased after 2008 no longer qualify for the credit
- Ford
and Mercury vehicles purchased after March 31, 2009, qualify
for a reduced credit.
- Unless
you elect not to claim the credit, you may have to reduce the
basis of each vehicle by the sum of the amounts calculated for
business use and personal use.
- If
the vehicle no longer qualifies for the credit, you may have
to recapture part or all of the credit.
- There
is NO AGI phase-out limit.
- The
credit maximum is $3,400, but the actual credit allowed varies
by vehicle.
The Case for Hybrids
- Due
to the Regenerative Braking technology, the batteries do not
need to be plugged into an external power supply for a
recharge.
- Although
hybrids are typically more expensive than comparable gasoline
powered autos, hybrids have higher mile per gallon ratings for
highway and city driving so the cost to fuel a hybrid over its
useful life is generally less than the cost to fuel a
non-hybrid auto.
- Some
car insurance companies may offer discounts to hybrid owners.
- The
hybrid vehicle drive systems generally will not require
anymore maintenance or attention than a comparable gasoline
powered car.
- Hybrids
emit less pollution into the atmosphere which is better for
the environment.
Sources:
Internal Revenue Service, IRS.gov
RIA Checkpoint, Tax Action Memo, TAM-1349
For
more information, please contact Tim Lieb at 215-564-1900.
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