Tax credits / incentives for hybrids?



  • gagricegagrice Pahrump, NevadaMember Posts: 31,450
    As you have discovered the hybrids are mainly for the upper middle class car buyers. Toyota does not build a hybrid for the entry level buyer. They are quite proud of the fact that their cheapest hybrid the Prius has a demographic buyer with an annual income of $85,000. Unless you put a lot of miles on a car each year it is hard to justify a hybrid anyway. I also think a lot of these fat cat hybrid buyers are going to get hit with AMT this year and they also DO NOT qualify for the tax credit.
  • stevedebistevedebi LAMember Posts: 4,098
    "I also think a lot of these fat cat hybrid buyers are going to get hit with AMT this year and they also DO NOT qualify for the tax credit."

    Congress put AMT relief into this year's budget. I don't know if the budget has passed yet. I believe it is a COLA adjustment.
  • kdhspyderkdhspyder Member Posts: 7,160
    Up to date steve.. I think the President just signed it last week. Good point
  • gagricegagrice Pahrump, NevadaMember Posts: 31,450
    I believe it is a COLA adjustment.

    That would be good, as it was put in place during the Carter administration. Wages have gone up since then. At least mine have. I think you can average back also. So I may get some back in retirement.
  • ranger2001xltranger2001xlt Member Posts: 85
    Keep in mind that it is the total for the manufacturer that counts against the 60k ceiling; while the Prius is Toyota's best seller, it also sells hybrid versions of the Camry, Highlander, Lexus RX, and Lexus GS, all of which count toward the limit. Anyway, Toyota will hit the ceiling late in Q2, or early in Q3; the next quarter after that still gets full credits, then the phaseout begins in the following quarter.

    Does anybody know what qualifies as a 'manufacturer' according to the IRS. Is the hybrid ceiling of 60,000 for Ford and 60,000 for Mercury (Escape and Mariner). Or do all Escapes and Mariner hybrids fall under the one manufacturer of Ford Motor Company?

    Alos dones anybody know how many Ford/Mercury hybrids have been sold to date? I know that they have been selling them since 2005.
  • stevedebistevedebi LAMember Posts: 4,098
    All Ford products are included. However, I don't think Mazda would be included, or Volvo. However it is possible.

    The sales volume began in 2006, and I don't think they have sold more than 20K vehicles this year.
  • wvgasguywvgasguy Member Posts: 1,405
    As you have discovered the hybrids are mainly for the upper middle class car buyers.

    Just because successful people purchase hybrids doesn't mean anyone can't buy them orht at they are not for everyone. Many Americans purchase vehicles in the $27,000 to $31,000 range. While not mid entry, that is certainly not luxury level and not out of the range of working Americans. These are working Americans who pay taxes, are not under the AMT and indeed can receive a federal tax credit, possibly a state tax credit as well.

    Mt TCH (loaded by the way) after tax credits will be less than $24,000. That and the 37.7mpg I am averaging so far over 2300 miles should make this attractive for many working Americans.

    For me this isn't a Green thing. It just makes sence. The fact that I'm not wasting gas however DOES make me feel better, especially when my credit card bill comes at the end of the month.

    BTW you can make substantially more than $85,000 and still not hit the AMT.
  • nomorebenznomorebenz Member Posts: 109
    Maybe a good time to let go of some of that appreciated capital. ;)
  • larsblarsb Member Posts: 8,204
    Let's hope that people were not just buying hybrids because of expensive gas and tax breaks......

    'Yota dropped in hybrid sales by about 4,200 cars after the tax break was halved and gas prices dropped.

    Let's hope this is not a downward trend.
  • gagricegagrice Pahrump, NevadaMember Posts: 31,450
    Almost every debate about the hybrid premium included the tax credit & HOV access as factors in making the difference saleable. I just don't see them selling in big numbers without those incentives.

    If you drive a lot of miles they can possibly be justified on mileage. If you want access to the HOV lanes driving solo there are only a few choices. For CA commuters the Civic GX is a great choice. Yet they only sell in very limited numbers.
  • larsblarsb Member Posts: 8,204
    gary says "For CA commuters the Civic GX is a great choice. Yet they only sell in very limited numbers."

    Not really a GREAT choice - you need a PHILL unit in your home and your range is very limited. If it was a GREAT choice a lot more of them would sell.

    Part of the problem is that people are bothered by the idea of filling their car up in their garage. And so many commuters dont even HAVE a garage - another problem.
  • gagricegagrice Pahrump, NevadaMember Posts: 31,450
    It will be the only vehicle with HOV access when the hybrid stickers run out. There are many CNG stations so you do not have to have a PHILL. Home filling is convenient and even less money than the commercial CNG stations. It is still more economical and cleaner than a hybrid. Plus it is not dependent on foreign oil. It is an alternative.
  • mschmalmschmal Member Posts: 1,757
    February 1, 2007

    To: All Ford and Lincoln Mercury Dealers
    Subject: 2008 Escape/Mariner Hybrid Tax Credit Update

    Update to Tax Credits

    The 2008 Escape and Mariner Hybrid will be arriving in dealerships early this year. Among the many updates we have made to the vehicles this year, one which you should be especially aware of is an improvement in real world fuel economy versus 2007MY (Window label numbers reflect new EPA calculations, see "Consumers to See Updated EPA Fuel Economy Estimates for 08 Models", communication from 12/13/06). For this reason, the IRS has approved an increase in the Federal tax credits available on our 2008MY Hybrids; up to $3,000 for FWD models (Tax credits on 2007MY Hybrids are unchanged).

    Please see below for a chart which shows the federal tax credits currently available on Escape and Mariner Hybrid, as well as their competitors.

    08 Escape / Mariner Hybrid (FWD) $3,000
    08 Escape / Mariner Hybrid (4WD) $2,200
    07 Nissan Altima Hybrid $2,350
    07 Honda Civic Hybrid $2,100
    07 Toyota Prius $1,575
    07 Toyota Highlander $1,300
    07 Saturn Vue Greenline $650
    07 Escape Hybrid FWD $2,600
    07 Escape / Mariner Hybrid 4WD $1,950

    Background on the Tax Credit Program

    Hybrid federal tax credits remain in effect until a manufacturer has sold its 60,000th Hybrid vehicle (sales after 12/31/2005 and before 12/31/2010). This means that ALL customers who purchased a Hybrid from Ford Motor Company during 2006 are eligible to claim a full credit on their 2006 tax return. In addition, it is expected that the all customers who purchase a Hybrid from Ford Motor Company during 2007 would be eligible to claim a full credit on their 2007 tax return.

    Once a manufacturer reaches its Hybrid vehicle limit, the tax credits will begin to diminish. Shortly after the 60,000th unit is sold, the credit will drop to 50% of its full amount for 6 months, followed by 25% of its full amount for an additional 6 months. At that time, the tax credit will be terminated.

    Last year, Toyota exceeded their ability to offer full credits. This means that Toyota Hybrid sales which occurred after 10/1/2006 have only been eligible for 50% of the full tax credit ($1,575 for Prius), and will decrease further throughout the year. Escape and Mariner however are still eligible for the full tax credit and our FWD models are currently eligible for a higher tax credit than all other Hybrid vehicles, at $3,000. As customers consider a Hybrid purchase, please ensure they are aware of this information.

    For more information visit
  • dfincherdfincher Member Posts: 4
    Can anyone inform me on how this credit is filed. Is it a line item on the 1040A Itemized Deductions and you send a copy of proof of purchase along with the W2's; or do I need to pick up a special IRS form?

  • jgoose514jgoose514 Member Posts: 3
    I turned our taxes over to a local CPA that does them quickly and at a great price each year for us...

    I'm curious, what sort of credit will I be receiving for purchasing the '06 Honda Civic Hybrid in 2006?

  • mecheng1mecheng1 Member Posts: 161
    It is IRS Form 8910 and instructions for 2006.
  • kermit4kermit4 Member Posts: 9
    Someone posted earlier about how those who pay Alternative Minimum Tax (AMT) don't get to take the tax credit. It turns out that even if you don't pay AMT, you may not get to take the full amount of the credit.

    The San Francisco Chronicle published an article recently on this titled "Hybrid Tax Credit Bait and Switch". The only way to check on how much of the credit you'll actually get is to calculate what you'd owe under AMT, even if you're not subject to paying the AMT. Your famiy income, the size of your family, and the number of deductions you already take are all issues here, so it's not one size fits all.

    I doubt that the Ford dealers are going to mention any of this to customers. Notice how they say that ALL customers who buy a hybrid from Ford in 2006 are eligible to claim a full credit on their 2006 return. Not that Toyota or Honda dealers mentioned it, either.

    Caveat emptor...
  • Karen_SKaren_S Member Posts: 5,092
    A reporter aims to talk to owners who purchased a hybrid last year and received the full tax credit but later found out they no longer could use the full tax credit because of the alternative minimum tax rule. If so, please contact me at [email protected] no later than Friday, March 2, 2007.
  • tpetpe Member Posts: 2,342
    AMT has definitely turned into a major dilemma for our government. On one hand they realize it's become unfair but on the other hand they can't afford to give up the revenue. This whole AMT thing was conceived at the government level. Is it possible that they made a mistake? Wow, how often does that happen?
  • mirspotmirspot Member Posts: 15
    I guess this says it all.....

    I just went through my tax return exercise and can only pocket a tenth of it after child tax credit.... just makes me mad.

    What's the point of posting this?
    Well, just wanted to see how you folks are reacting to it and if there is anywhere we can formally complain about this.

  • lzclzc Member Posts: 483
    The need to run the credit through the AMT filter was indeed an unpleasant surprise. I guess that's why no one at the dealership where I bought the car would say one word about it. "We know nothing." They were smart.

    But . . . I didn't buy the car for the credit. I wanted a 5-star safety-rated car that also reduced the amount of money I was sending to regimes that use that money to fund terrorism.

    So far, no regrets.
  • gagricegagrice Pahrump, NevadaMember Posts: 31,450
    The sad part is many dealers gouged a big chunk of that presumed tax credit. I wonder if they would be willing to give it back.
  • lzclzc Member Posts: 483
    >>The sad part is many dealers gouged a big chunk of that presumed tax credit.

    What does that mean?
  • gagricegagrice Pahrump, NevadaMember Posts: 31,450
    It means that during the period of time that folks wanted to get the tax credit, many dealers raised the hybrid price to get in on the windfall. I cannot tell you how many people posted here on Edmund's paid higher than MSRP because they planned to get part of it back in the form of a tax credit. If they in fact got the tax credit they are happy. If not they feel ripped off. For those that were patient, the reward is buying the Prius for much less and still getting a bit of a tax credit. If the only reason they were buying the Prius was to clog up the HOV lanes I guess they got what they deserve.
  • tpetpe Member Posts: 2,342
    You're absolutely correct. For a long time people were paying more than MSRP for Priuses. I think that we are all experienced enough in the car buying process to know that when a car is selling for more than MSRP there isn't a lack of demand. If this excess demand was partially created by the tax breaks then this policy definitely resulted in more dollars ending up in the hands of Toyota dealers and their salesman. Is manipulating the tax code to divert money to these groups a worthwhile objective?

    I'm not opposed to promoting fuel efficiency but this tax credit approach was not too well thought out.
  • gagricegagrice Pahrump, NevadaMember Posts: 31,450
    I totally agree. I also believe that encouraging people to buy a hybrid for solo operation in the HOV (high occupancy vehicle)lanes was not well thought out.
  • tpetpe Member Posts: 2,342
    There was a thread on that a while back. I speculated that one of the reason they had such an adverse effect on HOV lanes is that they were probably more likely to drive slower than the flow of traffic; you know, maximize those mpg stats. Not exactly what the typical HOV traveller wants to encounter.
  • epnfrnepnfrn Member Posts: 87
    OK, i'll have to chime in on this 'clogging the HOV lane'. while i absolutely agree that adding hybrids has taken away some of the HOV lane advantage, i am convinced that VIOLATORS are the #1 reason for slower carpool lanes (at least in the Bay Area).

    I have been paying close attention (scientist nerd here) for the last couple years, and have noticed that during my morning commute, when it is still dark, that as many as 1 of 3 cars are violators! the problem is a nearly complete lack of enforcement. worse yet, the people who dart into the faster-moving HOV lane from standard lanes are nearly always violators that then dart back out when their lanes start moving again. so they are slowing the HOV lane down, and creating a tremendous safety hazard as well.

    of course, i understand that enforcement is difficult, particularly during dark hours ... but please please please, if you are going to [non-permissible content removed] about and/or actually write a letter to someone (please do send the CHP an email!!)... [non-permissible content removed] about lack of enforcement, not hybrids!!!

    stepping off soapbox,
  • kermit4kermit4 Member Posts: 9
    Someone on the Honda GX board posted about not being able to get any of the $4k tax credit because of the alternative minimum tax. I feel his/her pain--we're in the same position.

    Maybe I'm being self-indulgent, but it seems like this is even more of a kick in the teeth for the GX owners than for the hybrid folks. Sure, both hybrid and CNG drivers pay a substantial premium for their cars, but there's already a substantial infrastructure for fuelling a hybrid. With CNG, you need to plan carefully for when you're going to fuel up, because the nearest CNG pump might be 10 miles away...or more. And if that station is closed for repairs, you better be sure that you have enough gas to get to the next nearest station. Not something the average commuter wants to deal with! Adding 100 mile towing to your auto club plan is a very smart move for CNG owners.

    I figured that the federal tax credit was there to help build up the number of CNG cars on the road, which would then increase the number of CNG customers, which would lead to a larger CNG fuelling infrastructure. All that would make it more likely that more people would consider buying a CNG-fuelled vehicle--no worries about where to fuel up, no needing to pay for a home fuelling unit. Sadly, I think it's going to take a lot longer to get there, because the tax credit really isn't there.
  • gagricegagrice Pahrump, NevadaMember Posts: 31,450
    We talked a lot about this a year ago. I know I got hit last year for the AMT. That pretty much kills any kind of Federal tax credit. Congress is not going to change it as that is a windfall for them. It was put in the code during the late 1970s is my understanding and never re-evaluated. It was supposed to be for very high income people. Guess what? What was a big income in 1970 is just average income today. So uncle gets more money without adding any new taxes. I will be surprised if 75% of hybrid buyers get their elusive tax credit. And it does not change the numbering plan at all. If 25% of buyers lose the credit. That is more that does not get shelled out by Congress in the energy bill.
  • hybrid4mehybrid4me Member Posts: 8
    Paid for vehicle in full and signed all documents this am, March 31, 2007 on a Toyota Camry Hybrid 50th anniversary edition. The vehicle will not arrive until next week because of a bottleneck at the Toyota distributor channel. After a call to our Toyota rep, we found that we are still eligible for the tax credit as long as we take delivery/possession in 2007. The tax laws read the PURCHASE date must be by March 31, 2007 for the $1300.00 credit and POSSESSION can happen any time in 2007 for the $1300.00 credit for the 2007 tax credit. Anyone with different information? ALL of my paperwork will show March 31, 2007 as the purchase date. Thanks in advance for your help.
  • PF_FlyerPF_Flyer Pennsylvania Furnace, PAMember Posts: 9,400
    I haven't read the tax law, so I'm going with what you said it says. If it had to be purchased by March 31, and it sounds like you have paperwork that shows that, you should be eligible for the tax credit.

    Now for the word of caution. A number of people are finding that even though they bought a hybrid because of the incentive of the tax credit, the particulars of their tax situation (because of the alternative minimum tax or other reasons) doesn't allow them to get the full tax credit when the time comes to file their taxes. So you might want to look closer at your taxes to see if you have an annoying surprise in store for April 2008.
  • kdhspyderkdhspyder Member Posts: 7,160
    I believe that you are correct and that you've been told accurate information. As far as Toyota and the dealer are concerned this vehicle has left their possession and is now yours.
  • hondagxsaleshondagxsales Member Posts: 33
    For a complete explanation of how the tax credit works and how it effects you, copy this link into your browser. It's the most complete explanation I've run across. redit%20Laws/

    It's in the Civicgxtalk group in Yahoo Groups.
  • hondagxsaleshondagxsales Member Posts: 33
    Why can't you manipulate your deductions to maximize your return. Claim 10 dependents thru the year and end up owing at the end of the year. The average person gets a refund. Set yourself up to take advantage. You may not get the whole $4,000 but you'd lose less than you would otherwise and your paycheck would be bigger all year long. I'd suggest talking to your tax professional to avoid owing more than you intended.
  • epnfrnepnfrn Member Posts: 87
    hondagxsales -- the govt doesn't look too kindly on this type of manipulation, and they will show you their feelings if you alter your W-4 beyond what is reasonable. besides ... none of that really matters, as the credit is applied to your tax liability, which of course is the same at the end of the year regardless of how many exemptions you've claimed during the year. you pay by the paycheck, or you pay at the end of the year ... it's the same number at the end of the game, and this is what the credit works on.

    but i think we both agree, people with questions should talk to a pro, and not us! :)

  • karolpl7karolpl7 Member Posts: 40
    I see this forum's been quiet for a while but... does anyone know about current state/local incentives for hybrid vehicles in NY state? I've found several references to proposed bills, one for $4,000 tax credit, but that's it; A 4281 (similar to S 4365)

    Does anyone has any details?

  • gagricegagrice Pahrump, NevadaMember Posts: 31,450
    This is the Federal Website with all the tax credits for hybrids. Toyota & Lexus are phased out as of 9/30/07.

    It looks like NY has a few benefits for alternative fuel vehicles. Several bills were proposed and expired without being enacted. Another thing to remember. You will not get the Federal tax credit if you fall under the "Alternate Minimum Tax". Check out this site.
  • karolpl7karolpl7 Member Posts: 40
    Seams like every site has different information about state tax incentives. I guess I will need to check again before April 15th.
  • 1stpik1stpik Member Posts: 495

    The Internal Revenue Service has discontinued the federal tax credits for Toyota hybrid vehicles—including the flagship Prius—as of Oct. 1, 2007. Toyota Motor Corporation hit a legal cap in the number of vehicles sold that can offer the credit. Only hybrids purchased before the Oct. 1 deadline are now eligible for the incentive.

    According to IRS rules, tax credits for new hybrid vehicles phase out when an automaker sells 60,000 hybrids. Toyota hit the magic number last summer, which initiated the beginning of the process. Honda recently reached the mark of 60,000 hybrids sold, and will now start their phase-out next year. GM, Ford, and Nissan are not expected to reach cap before 2009 when the incentive laws will be reconsidered or entirely discontinued.
  • supercub43supercub43 Member Posts: 6
    I bought my 07 Hybrid last year and was just curious what I can expect as far as a tax credit. I live in Ca, divorced, no dependents....income around $60 thousand. Thanks
  • 1stpik1stpik Member Posts: 495
    You'll get the full $2,100, but don't brag about it. Otherwise, people will know that you earn less than $100,000, which makes you a slacker!

    Especially in California.

  • gagricegagrice Pahrump, NevadaMember Posts: 31,450
    It depends what hybrid you bought. What date you bought it and if you will be stuck with the AMT. Those that get stuck with Alternate Minimum Tax cannot claim the tax credit. Good luck.
  • cephraimcephraim Member Posts: 31
    I know the Altima still has the $2350 tax credit incentive.

    Anyone know if there are any gross income limitations on this?
    (i.e.: Can you make "too much" to get it?)
  • PF_FlyerPF_Flyer Pennsylvania Furnace, PAMember Posts: 9,400
    Here's an answer that was given on htm

    Qualifying for the credit - and how much of it you can take - depends on how close you come to having to pay the Alternative Minimum Tax.

    It's a problem that could affect many hybrid car buyers who have six-figure incomes and take a lot of deductions, said Wisconsin tax preparer David Mellem.

    As the name implies, the AMT sets a minimum amount of tax you must pay even if you have deductions that would seem to allow you to pay less.

    The AMT disallows a lot of common deductions that are allowed under the regular code. If the AMT amount is higher, you must pay the AMT.

    The rule - and the rub - when it comes to determining how much of a hybrid tax credit you get is this: it isn't allowed under the AMT.

    Even if you don't have to pay the AMT, it could still take a bite out of your tax credit. If the difference between your taxes and the AMT amount happens to be less than the hybrid tax credit, you can only take part of the credit. (Otherwise, it would make your taxes less than the AMT.)

    Here's how it works: Bob, Jack and Jane each purchased a Ford Escape hybrid SUV in late 2007, and each was counting on a $3,000 tax credit.

    At tax time, Bob finds that his tax bill is greater under the AMT than it is under the regular code, so he must pay the AMT. Bob's Escape can't help him escape his big tax bill. He gets no hybrid tax credit.

    Jack's regular taxes, on the other hand, are $3,500 more than what he would have to pay under AMT. So he doesn't have to pay AMT and he gets the full $3,000 tax credit.

    Jane doesn't have to pay the AMT, either. But her taxes are just $1,200 more than she would have had to pay under AMT. So instead of the $3,000 credit she was expecting, she gets a credit of just $1,800.
  • tomscot2tomscot2 Member Posts: 33
    The AMT kicked in for us this year and as a result our tax credit went by the wayside.
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