If you’ve put off purchasing a hybrid until 2006, you stand to reap significant tax savings, according to Jackson Hewitt Tax Service.
Under the Energy Policy Act of 2005, qualified hybrid passenger automobiles and light trucks offer a credit range from $400 to $3,400, depending on the fuel economy achieved if purchased in 2006. That’s much better than previous years.
For example, a single person making $40,000 per year who purchased a qualified hybrid vehicle on November 25, 2005 would be eligible for a tax deduction of $2,000, saving her $500 in taxes. However, if this person waited until 2006 to buy this vehicle, the tax credit would be $2,100, saving an additional $1,600 in taxes. This tax credit is based on a hybrid vehicle with a weight of approximately 3,000 pounds and a fuel efficiency rating of 60 miles per gallon in the city.
According to the American Council for an Energy Efficient Economy (ACEEE), the following vehicles may generate a tax credit based on the industry information available:
Current Fuel-Efficient Vehicles
Ford Escape Hybrid (two- or four-wheel drive)
Honda Accord Hybrid
Honda Civic Hybrid (auto or manual)
Honda Insight (auto)
Lexus RX 400h
Mercury Mariner Hybrid
Toyota Highlander Hybrid (two- or four-wheel drive)
(based on estimated specs)
Lexus GS 450h
See the January/February issue of Business Fleet
Magazine for more information on calculating your tax credit.