Hybrids Bring Tax Credit, but not Much Savings
A new energy bill that went into affect this year allows hybrid purchasers to file for a tax credit. This article says the 2006 break is better than the 2005 tax deduction because a credit directly reduces the taxes owed.
The IRS hasn’t assigned a dollar amount per car yet, but it looks like the Toyota Prius will have the most, with a possible tax credit of $3,150.
The tax credit is in affect until each manufacturer sells 6,000 hybrids. That will probably happen around April, the article says.
The requirements:
• The vehicle must be purchased in 2006
• It must be new
• It must be used or your own personal or business use
• You can’t turn around and resell it
Some states offer additional tax incentives and some insurance companies offer discounts to hybrid buyers.
But while hybrid cars may give you a tax break and save you some at the pump, over the course of the car’s life, you’ll end up paying more than you would for a regular gas-powered car.
This article features a study that showed how a Honda Accord hybrid could cost $3,800 more than a regular Honda Accord EX V-6 over five years. That includes the purchase price, maintenance and gasoline expenses.
Get smart and save money on fuel in other ways:
• Drive more gently; don’t accelerate aggressively or speed. By doing so, you can improve your gas mileage by 30%, according to driving tests by Edmunds.com.
• Consider diesel engines. They qualify for the new tax credits in 2006 as well. They get better gas mileage than regular cars because of their more durable engine. Plus, diesels have a higher resell value than gas-powered cars.
• Look to more fuel-efficient non-hybrid vehicles. Ditch the big SUVs and opt for a lighter car. You’ll sacrifice engine power, but what’s more important to you? Saving money or riding in style? Hopefully you can find a model of car that accomplishes both.