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Tax credits / incentives for hybrids?

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Comments

  • molokaimolokai Posts: 313
    Actually... there was a story recently on someone who tried to end her life with a Prius in her garage. She failed to do so because of the low emissions. I read this on Prius Chat a few months ago. The Prius is by far the cleanest burning vehicle available in the US. With that comes some goodies from the US government. One of them is HOV usage and another is a nice tax credit. Hybrids like the Prius and HCH and Insight have the same mileage as a motorcycle. Too bad you don't like the fact that we have access to the HOV lanes. Write to your congressman and don't complain here. No one cares, and I certainly don't. I love the exclusivity of owning my hybrid. I also am very smug about it. Don't like it? Scroll by!! :P
  • In response to your question about who would buy a hybrid car without the tax incentive or credit, there are plenty of us out there who would and who have. I purchased a Toyota Prius 4 months ago for the mileage as i was in the market for a economical car for commuting. Since then I have fallen in love with it, sold the Mercedes and have a second car on order. I was planning on getting it sometime in October, but am now waiting till January because of the tax credit. We did not know about the tax deduction for 2005 at the time we bought our 2005 model. we just walked in and bought the floor model, and learned of the tax deduction when we signed the papers. we are getting 50-65 MGP. thats enough reason for the purchase for some of us.
  • stevedebistevedebi LAPosts: 4,098
    "We did not know about the tax deduction for 2005 at the time we bought our 2005 model. we just walked in and bought the floor model, and learned of the tax deduction when we signed the papers. we are getting 50-65 MGP. thats enough reason for the purchase for some of us."

    This is exactly why many people are questioning the wisdom of offering tax incentives for a vehicle class (hybrids) that already is selling well.
  • larsblarsb Posts: 8,204
    Anyone questioning the wisdom of offering Hybrid incentives has formed an incorrect question......

    We need MANY MANY thousands more hybrids to sell. The more incentives, the more likely people will learn about, know about, seek out, and buy Hybrid vehicles.

    The sooner we get to 500,000 hybrids sold a year in the US the better we all are, environmentally and technologically. More hybrids mean more R&D money to the carmakers and that means better, more efficient hybrids down the line.
  • stevedebistevedebi LAPosts: 4,098
    "Anyone questioning the wisdom of offering Hybrid incentives has formed an incorrect question......"

    I respectfully disagree. Hybrids are selling fine without incentives. Let the hybrids sell themselves, along with advertising from the manufacturors. That is what other cars do. In fact, by limiting the incentives to 60,000 units, the government is in effect penalizing Toyota for making as many hybrids as it can sell - the sooner that 60K mark is reached, the sooner the incentives begin to fade. Not real good in the "long term" incentives department. Now, if Toyota was making 1 million of these type of cars per year and not selling, that would be a different story; but that is not the current reality.

    Or is there some reason you think that hybrids would need extra incentives to sell? You realize, I trust, that this implies something wrong with the hybrids such that they don't sell when compared to ICE cars on a "level" playing field?
  • larsblarsb Posts: 8,204
    Let me repeat:

    We need MANY MANY thousands more hybrids to sell. The more incentives, the more likely people will learn about, know about, seek out, and buy Hybrid vehicles.

    The sooner we get to 500,000 hybrids sold a year in the US the better we all are, environmentally and technologically. More hybrids mean more R&D money to the carmakers and that means better, more efficient hybrids down the line.

    And the reasons hybrid cars do not sell like hotcakes at a lumberjack convention already are:

    1. Lack of public education about the awesomeness of the technology.
    2. Premium price to make up for the additional hardware turns cheapskates off.
    3. People are generally "complacent" about Global Warming and the environment.
    4. The failed EV1 program which confused the public into thinking that Hybrids still need to be "plugged in" every night.
    5. The well-deserved reputation of the 1999-2002 hybrids being "too small, too ugly, and too underpowered."
    6. The Hybrid supply shortage of 2003-2004.

    ALL of these problems can be solved with MORE MORE MORE hybrids being sold, better advertising, and the government giving people tax breaks. Let the government help !!

    Sometimes even hungry people have to be led to the dinner table......:D
  • gagricegagrice Pahrump, NevadaPosts: 31,432
    Tell us how you really feel about the hybrid technology.

    What little I have gleaned from this energy bill the Prius gets a very nice credit. Yet the HCH seems to not be getting as much. In reality the HCH is getting closer to the EPA mileage ratings than the Prius. I think they need to look at that incentive a little closer. I think they may have added the 60k limit to get other automakers involved. The more the merrier. I would like to see more vehicles getting 50 MPG plus.
  • sinepmansinepman Posts: 137
    I thought the HCH gets the same deduction as the Prius. According to greenhybrid it appears the Prius gets a few MPG better than the HCH. Perhaps it has something to do with full/mild hybrid differences. I bet the 2006 HCH will be real sweet. I love the fact that people will get nice tax credits now. At least the playing field is more level now.
  • gagricegagrice Pahrump, NevadaPosts: 31,432
    I bet the 2006 HCH will be real sweet

    Maybe they will re-evaluate the new HCH. I thought I saw a much smaller credit for the HCH than the Prius. They should be close to the same.
  • jrct9454jrct9454 Posts: 2,363
    ...is based on how the hybrid car compares to other cars in its size and weight class. Since a hybrid Civic is being compared to a conventional Civic [and similar subcompacts], the resulting mileage difference is less dramatic than in the case of the Prius vs other cars of similar weight and size. Thus, the Civic Hybrid gets a lower tax credit.
  • I'd love to buy a hybrid, but you can't find them upstate NY. Dealers are sold out for 2005 model year. Do the car companies steer them to Cal/Sunbelt states?
  • zacharyazacharya Posts: 71
    Try and put an order in for 2006. This way you can get a tax credit. Where in the Catskills? I used to go there for the summer when I was a teenager. I can suggest a good dealer in PA if you want to travel.
  • About 5 miles off exit 21 of the Thruway, about 30 miles south of Albany. They call this area the Northern Catskills. Most people went to the southern Catskills like Grossingers, in Sullivan County.

    I try to stick to dealers in the Hudson Valley area. I don't care what they say, you get better service from the dealer you buy from. ... I can't say that I blame them. The Honda Dealer in Poughkeepsie already said they give a 20% discount for purchasers on service.
  • jmc0816jmc0816 Posts: 8
    Could someone with some degree of certainty clarify something for me. Is the 2005 tax break a DEDUCTION and the 2006 tax break a CREDIT? It seems that they are both only DEDUCTIONS but I have seen the 2006 been referred to as a CREDIT.
  • larsblarsb Posts: 8,204
    The 2006 stuff is a Credit, where the amount comes off your bottom line tax amount owed after all the calculations are finished. If you get a $3150 credit for purchasing a Prius, that means your overall taxable income drops by $3150. A much better deal for the taxpayer.

    The 2005 stuff is a just a deduction, meaning you only get to take a "percentage" of the amount off your taxes, based on your tax bracket.
  • gagricegagrice Pahrump, NevadaPosts: 31,432
    I must correct you on that. The tax credit is a direct deduction from your tax bill. If you are paying $10k in taxes for 2006 that will reduce your taxes by $3150. A $2000 deduction that is available through 2005 is taken from your taxable income. If you had a taxable income of $45,000 you would be able to reduce that to $43,000. Hope that makes it clearer.
  • larsblarsb Posts: 8,204
    Sorry Gary, I was correct.....The "deduction" is a percentage reduction, while the "credit" is a dollar for dollar tax reduction.

    see this page:

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/08/18/BUG9EE9ANG1.DTL

    "For most people, the credit, which reduces taxes dollar for dollar, will be more valuable than the existing $2,000 deduction, which reduces income before taxes.

    A $2,000 deduction reduces most people's tax bill by about $500 to $700.

    A $2,000 tax credit will cut most people's tax bill by $2,000, with a big exception.

    Unlike the deduction, the new tax credit will also apply to cars that are leased, although you will probably have to sign a five-year lease to get the full credit, says George Jones, managing editor in the Washington of CCH, which publishes tax information."
  • Hi, I'm new to this forum. I have been planning my Prius purchase for a few months now, saving up for a down payment. Now that I'm ready, this new tax law makes me think twice about buying in September as planned. It's hard to justify giving up a potential $3000 credit for the sheer joy of having my car sooner. It makes me wonder if at some point Toyota is going to have to give in and offer incentives to get rid of the rest of the 2005s. That would probably only happen if they finally reveal the details of the plan and it's required that you buy the 2006 car to qualify for the credit.
  • gagricegagrice Pahrump, NevadaPosts: 31,432
    Sorry Gary, I was correct.....The "deduction" is a percentage reduction, while the "credit" is a dollar for dollar tax reduction.

    Yes that is correct. What you said before is the credit is a deduction from your adjusted gross income. It is a deduction from the taxes you pay.
  • jmc0816jmc0816 Posts: 8
    Thanks guys, you are actually both correct but are wording your responses differently. The adjusted gross income piece that Gary is referring to is the same as saying it is a "percentage reduction" for 2005. You are only getting the effective tax rate portion of your $2000 deduction back as cash in your pocket. If your effective tax rate is 28% you would be getting $560 effectively back.
  • gagricegagrice Pahrump, NevadaPosts: 31,432
    welcome to the forum and glad you were able to figure out what we were both trying to explain. If you can wait till next year it would be worth it. Though I would think the supply of hybrids would be tighter.
  • jmc0816jmc0816 Posts: 8
    Thanks. I'm more than likely going to be ordering soon for Jan. 06 delivery. I'm waiting for my dealer to arrange a "meet and greet" with a vehicle so I can actually look at it. I'm not sure how big the hatch area is. (I'm concerned about my dog having enough room back there). From what I've heard the cars are also difficult to see out the rear so I'm also interested in the rear camera that the '06 models will have.
  • To avoid confusion, and to be technically correct, one cannot ever say a "tax credit is a direct deduction." A credit and a deduction are two separately defined items on a tax return. They cannot both be used to define the same tax event.

    A credit is a REduction (dollar for dollar) to your taxes. A deduction reduces taxable income by the deducted amount. The net benefit of the deduction is your marginal tax rate times your deduction.

    In any event, here's an interesting website that lists what the expected 2006 tax credits will be by vehicle:

    http://www.ucsusa.org/hybridcenter/incentives.cfm
  • Well, not exactly. It's your marginal tax rate, not your effective. Whatever.
  • Federal Tax Credits for Advanced Vehicles: On August 8, President Bush signed the comprehensive energy bill into law. Included were new tax credits for advanced vehicle technologies ranging from $250 to $3,400 depending on the vehicle's level of fuel economy improvement. For a limited time, quality hybrids like the Honda Civic Hybrid, Toyota Prius or Ford Escape Hybrid will qualify for tax credits in the range of $1,700-$3,150. The tax credits will be available beginning on January 1, 2006 and will be available through December 31, 2010, though they will expire earlier for the most popular hybrids. The full tax credits will be available until a manufacturer reaches 60,000 vehicles sold (60,000 for Toyota, 60,000 for Ford, etc.). Once a manufacturer has sold 60,000 vehicles, a one-year "phase out" will begin after the next complete calendar quarter; 50% of the credit will be available for that manufacturer's hybrids in the first two quarters of the phaseout period and 25% in the final two quarters. UCS estimates the following credits for each hybrid vehicle currently sold:
    HEV Model Emissions Rating Tax Credit
    2005 Toyota Prius Bin 3 $3,150
    2005 Honda Insight (automatic) Bin 5 $1,450
    2005 Honda Insight (manual) Bin 9 $0
    2005 Honda Civic Hybrid (automatic) Bin 2 $1,700
    2005 Honda Civic Hybrid (manual 5-speed) Bin 2 $1,700
    2005 Honda Civic Hybrid (lean burn, automatic) Bin 9 $0
    2005 Honda Civic Hybrid (lean burn, manual 5-speed) Bin 9 $0
    2006 Honda Civic Hybrid TBD* $2,100-$2,350*
    2005 Honda Accord Hybrid Bin 5 $650
    2005 Ford Escape Hybrid (front wheel drive) Bin 4 $2,600
    2005 Ford Escape Hybrid (four wheel drive) Bin 4 $1,950
    2006 Mercury Mariner Hybrid (four wheel drive) Bin 5 $1,950
    2006 Toyota Highlander Hybrid (front wheel drive) Bin 3 $1,950
    2006 Toyota Highlander Hybrid (four wheel drive) Bin 3 $2,200
    2006 Lexus RX-400h (four wheel drive) Bin 3 $2,200
  • Hi all,

    I'm a new member, and am currently looking at the Honda Insight and the Toyota Prius.

    I was told by a local Toyota dealer that the tax incentive for a Prius purchased before the end of 2005 was $2000.00. He said that the 2006 incentive will only be $500.00. Judging by the previous posts, that doesn't appear to be the case. Was he misinformed?
  • blaneblane Posts: 2,017
    mfusaro,

    The person that you spoke with at your local Toyota dealer was WORSE than misinformed. He was just totally ignorant of the subject, or deliberately attempting to mislead you. Actually, he was probably trying to get you to commit NOW (which would be in his best interest), instead of waiting for delivery after January 1, 2006 (which, taxwise, would be in your best interest).
  • OK

    I've done some homework and delved further back in this thread.

    I'm old enough to remember the gas crisis of the 70's. I recall sitting in long lines, waiting on odd or even days for my 'gas ration'. At the time I was driving a volkswagon beetle, so I was better off than some. I remember the devastating effect on the economy, the massive inflation, out of control interest rates, and general decline in economic outlook that lasted into the 80's, when Reagan spent our way out of it.

    Through all the ensuing years, I've wondered about the rationale of Detroit, the government, and people in general, who recovered and quickly forgot the impact of that glitch in the oil supply. The initial flurry of fuel efficient imports was quickly drowned out by bigger and thirstier American cars, and that trend has never stopped.

    I recently decided to buy a new car. I had no idea there even were tax incentives. I looked at a Scion Xa and a few other small, fuel efficient cars, as well as the Prius and Insight. I will buy a fuel efficient car, regardless of incentives. Even with incentives, the hybrid cars are more expensive to own, but recent events have shown that gas prices can skyrocket overnight, and if that is a continuing trend, and I believe it will be, those statistics could change and hybrids will begin to look better and better.
  • thanks for the info, blane.

    At the time, I wasn't aware there were any incentives. It occurs to me that he was probably fishing for an easy sale. He had two new Prius on the lot and was probably hoping I'd buy one on the spot. As it turns out, I was undecided and wanted to do a little more research before making a commitment..
  • blaneblane Posts: 2,017
    mfusaro,

    Have you sat in an Insight? You may find that you would have to make too many compromises in comfort, useability and driveability. You might want to look at the Civic Hybrid too.
This discussion has been closed.