Buy a Hybrid Car - Chop Your Taxes

The Energy Policy Act of 2005 replaced the clean-fuel burning deduction with a tax credit, thus reducing or even eliminating the taxpayer’s tax obligation.

The tax credit for hybrid vehicles applies to vehicles purchased or placed in service on or after January 1, 2006.

The credit is only available to the original purchaser of a new, qualifying vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit. 

Hybrid vehicles have drive trains powered by both an internal combustion engine and a rechargeable battery. Many currently available hybrid vehicles may qualify for the tax credit.

Tax Savings With Hybrid Vehicle

So... if you buy a hybrid in the United States and it’s on the list below, you’re all set to put some extra change back in your pocket. It all began when the Energy Policy Act of 2005 replaced the clean-fuel burning deduction with a tax credit, and now it’s in your benefit if you’re in the market for a hybrid vehicle.

What exactly is a tax credit? It’s a specific dollar amount that is subtracted directly from the total amount of your federal tax owed, and it reduces your tax obligation. The tax credits listed below are for hybrid vehicles purchased or placed in service on or after January 1, 2006.

Cost incentives also vary state-by-state, so it's a good idea to check your state's hybrid incentives. And give your insurance company a call--many offer discounts to hybrid owners.

We are not tax experts, so this information is not provided as tax advice and should not be relied upon as such. Remember to consult your tax advisor and check the for tax advice pertaining to the tax credit and the phaseout period.

The following models have been certified for current tax credit, with upcoming currently known phaseouts noted:

2008 Hybrid Models

    * Chevrolet Malibu Hybrid — $1,300
    * Ford Escape 2WD Hybrid — $3,000
    * Ford Escape 4WD Hybrid — $2,200
    * Honda Civic Hybrid CVT — $2,100
    * Mazda Tribute 2WD Hybrid — $3,000
    * Mazda Tribute 4WD Hybrid — $2,200
    * Mercury Mariner 2WD Hybrid — $3,000
    * Mercury Mariner 4WD Hybrid — $2,200
    * Nissan Altima Hybrid — $2,350
    * Saturn Aura Hybrid — $1,300

2007 Hybrid Models

    * Chevrolet Silverado 2WD Hybrid Pickup Truck — $250
    * Chevrolet Silverado 4WD Hybrid Pickup Truck — $650
    * Ford Escape Hybrid 2WD — $2,600
    * Ford Escape Hybrid 4WD — $1,950
    * GMC Sierra 2WD Hybrid Pickup Truck — $250
    * GMC Sierra 4WD Hybrid Pickup Truck — $650
    * Honda Accord Hybrid AT — $1,300
    * Honda Accord Hybrid Navi AT — $1,300
    * Honda Civic Hybrid CVT — $2,100
    * Lexus GS 450h — $0
    * Lexus RX 400h 2WD and 4WD — $0
    * Mercury Mariner 4WD Hybrid — $1,950
    * Nissan Altima Hybrid — $2,350
    * Saturn Aura Hybrid — $1,300
    * Saturn Vue Green Line — $650
    * Toyota Camry Hybrid — $0
    * Toyota Prius — $0
    * Toyota Highlander Hybrid 2WD and 4WD — $0

2006 Hybrid Models

    * Chevrolet Silverado 2WD Hybrid Pickup Truck — $250
    * Chevrolet Silverado 4WD Hybrid Pickup Truck — $650
    * Ford Escape Hybrid (Front) 2WD — $2,600
    * Ford Escape Hybrid 4WD — $1,950
    * GMC Sierra 2WD Hybrid Pickup Truck — $250
    * GMC Sierra 4WD Hybrid Pickup Truck — $650
    * Honda Accord Hybrid AT w/updated calibration and Navi AT w/updated calibration — $1,300**
    * Honda Civic Hybrid CVT — $2,100
    * Honda Insight CVT — $1,450
    * Lexus RX400h 2WD — $0
    * Lexus RX400h 4WD — $0
    * Mercury Mariner Hybrid 4WD — $1,950
    * Toyota Highlander 2WD Hybrid — $0
    * Toyota Highlander 4WD Hybrid — $0
    * Toyota Prius — $0
    * 2006 Honda Accord Hybrid AT and Navi AT without updated calibration qualify for a credit of $650.

2005 Hybrid Models

    * Ford Escape 2 WD Hybrid — $2,600
    * Ford Escape 4 WD Hybrid — $1,950
    * Honda Accord Hybrid AT and Navi AT — $650
    * Honda Civic Hybrid MT and CVT — $1,700
    * Honda Insight CVT — $1,450
    * Toyota Prius — $0

      * According to the IRS, this reflects a decrease in the credit amount as of Oct. 1, 2006, due to the manufacturers meeting quarterly sales of 60,000 quotas.

      **According to the IRS and Dept. of Energy, 2006 Accord Hybrids without Honda's "updated control calibration" are eligible for a $650 credit. Late production models, as well as early production models with Honda's free control calibration update, are eligible for a $1,300 credit. See Honda and the Internal Revenue Service for additional details. 

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Buy a Hybrid Car - Chop Your Taxes