Incentives and laws
Why car fans are lured by the term ‘hybrids’? If you think it is the technology alone that attracts the car buyers to it, you are mistaken. Look at the following facts on how federal governments green-signal the sale of the hybrids by a set of laws and incentives. Of course, the credit goes to the efficient fuel-technology, a dream come true for the car owners as well as the governments on their worries of the environmental hazards produced by the vehicle emissions.
The New Tax Credit for 2006 which took effect on January 1, 2006, is offered as full dollar tax credits for the car buyers. According to the official data, Toyota Prius will get the highest tax credit, an awesome $3,150, followed by three models, viz., Ford Escape Hybrid (2wd), Toyota Camry Hybrid, and Toyota Highlander Hybrid, each for $2,600.
The tax credits are calculated on the basis of fuel efficiency of the models. If that is the criteria, you can get a better picture of the performance of the cars by comparing the tax incentives offered to them. The figures say that among the popular models, 2005 Accord Hybrid The Honda Accord hybrid, avails the least tax benefit, $650, owing to its high speed and power as a sport sedan, the fastest hybrid model in the market.
In order to avail the tax benefit, certain conditions have to be met by the car manufacturers and the car owners. Some important guidelines are as follows.
• The taxpayer who buys a vehicle that is serviced after December 31, 2005 and purchased on or before December 31, 2010 and that is qualified for the tax credit will avail the tax benefit.
• The purchase should be made in the name of the taxpayer, and if a company leases the car to its employee, the company may claim the benefit.
• The tax credit policy insists that the vehicle should be primarily used in the United States.
The tax credit has some obscurity in it. The government has announced that it avails this tax benefit to the first 60,000 buyers of each manufacturer, and Toyota already hit the target in June 2006. Does it mean that the Toyota hybrid market will become stagnant until the rivals such as Honda or Ford hit their targets too?
Take a look at the detailed picture of this tax benefit. It states that buyers who made the purchase of any one of the five Toyota models or Lexus gasoline-electric hybrid model before October 1, 2006, will get a full tax credit, while those who made the purchase after this date will avail a 50 percent credit. Further the credit will stay 50 percent for the successive two quarters and then it will be reduced to 25 percent in the next two quarters and then expires on October 1, 2007.
The hybrid tax credit is a non-refundable tax credit. The credit will reduce your regular income tax liability, but not below zero. The credit will not reduce your alternative minimum tax, if that applies to you. The hybrid tax credit is available to both individuals and businesses, including self-employed people.
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