Hybrids Save You Money!
They cost less than the average car sold in Maine . . .
They cost less to operate . . .
AND you can save real cash on your taxes!
Federal Income Tax Deduction
The federal “Clean-Fuel Vehicle Property Deduction” (pursuant
to section 179A of the Internal Revenue Code) allows an owner of a
new hybrid to subtract from his/her adjusted gross income by $2,000.
| Year Placed in Service | Maximum Federal Deduction |
| Through 2003 | $2,000 |
| 2004 | $2,000 |
| 2005 | $2,000 |
| On LINE 32 on FORM 1040 enter: “Clean-Fuel Vehicle Deduction—(fill in amount from chart)” |
|
Federal Tax Credit Starts in 2006
As a result of the recent passage of the federal energy bill there
will be new federal tax credits for new hybrid vehicles effective
January 1, 2006 through 2010. The amount of the credits are based
on fuel economy and "conservation" (and will vary from between
$250-$3,150 with the maximum amount of $3,400). It has been estimated
that the Toyota Prius is eligible for the highest credit. A tax credit
allows consumers to deduct the full dollar value of the credit on
their taxes as opposed to claiming a tax deduction.
However, credits for each manufacturer's vehicles are phased out once
60,000 of them have received credits.
Once a manufacturer hits the cap, you'll have anywhere from 3-5 more
months to get the full credit. Then the phase-out begins -- 6 months
at 50% credit and 6 months at 25% credit. So if you're thinking about
taking advantage of this credit, especially with Honda or Toyota who
sell the largest number of hybrids, head to a showroom early, and
don't be afraid to ask the dealer to confirm that you will be getting
the full tax credit before you buy.