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Congress to End Green Car Tax Credit

December 16, 2010

Congress is ending a five-year-old tax credit of up to $4,000 for hybrid-electric, clean-diesel vehicles and natural-gas vehicles, according to the Detroit News.

Congress declined to include the credit as part of the $858 billion tax bill approved by the Senate on an 81-19 vote Wednesday. A House vote, without the green-car tax provision, is expected today.

"It's a real problem," said Sen. Carl Levin, D-Detroit. But Congress could try to restore the credit next year, he said.

In 2005, Congress limited the number of hybrids that could get the credits. Once an individual manufacturer sold more than 60,000 qualified vehicles, the credit was gradually phased out for subsequent cars.

As a result, hybrid vehicles from Toyota Motor Corp., Honda Motor Co. and Ford Motor Co. are ineligible for the credit. The Toyota Prius, the best-selling hybrid in the U.S., became ineligible for any credit in September 2007. Honda lost its eligibility on Jan. 1, 2009, and Ford's expired March 31.

A Honda Civic that runs on compressed natural gas will be eligible for $4,000 tax credits until Dec. 31.

According to the IRS website, 20 vehicles remain eligible through the end of the year: 14 hybrids, five diesels and the natural gas Honda.

Ten are General Motors Co. products - versions of the 2011 Cadillac Escalade Hybrid, Chevy Silverado, Tahoe, GMC Sierra, Yukon and Yukon Denali. They still qualify for a $2,200 tax credit, through the end of the year.

Also expiring are $900 credits for three BMW AG hybrids, a $2,350 credit for Nissan Motor Co.'s Altima hybrid and $2,200 for Daimler AG's Mercedes-Benz ML 450 hybrid.

Through the first 11 months of 2010, hybrid sales accounted for just 2.4 percent of all vehicles sold, and clean diesels account for less than 1 percent of sales.

In 2008, Congress approved up to $7,500 tax credits for electric vehicles. Last year, Congress expanded it from 250,000 industry-wide, to 200,000 per each manufacturer.

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