Tax Credits for Toyota Hybrid’s Begin to Phase Out…

September 9, 2006 · Filed Under Hybrid Vehicles, Related News, Tax Credits

One of the ways the US Government has helped motivate consumers to buy more fuel efficient vehicles is through generous tax incentives on the Hybrids. These include various models from Ford, General Motors, Honda and Toyota.

But as the manufacturer sells more of any particular model, those incentives begin to “phase out” in two steps, each one reducing the tax credit for that particular model by half.

Toyota appears to be the first manufacturer reaching those sales numbers, and on October 1st, 2006 the tax credits for the 5 Toyota-made models will be cut in half. If you want a Toyota Hybrid, you have until the end of September to get the full tax credit for your purchase! ($3150 on the Prius)

(From “FuelEconomy.gov”)

Qualifying hybrids purchased or placed into service after December 31, 2005 may be eligible for a federal income tax credit of up to $3,400.

Credit amounts will begin to phase out for a given manufacturer once it has sold over 60,000 eligible vehicles.

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When does this incentive end?

The credit will begin to phase out for vehicles offered by a given manufacturer after it sells a total of 60,000 eligible hybrid and lean-burn vehicles starting from January 1, 2006. RS will announce when a manufacturer has exceeded this sales figure.

Beginning with the second calendar quarter after the calendar quarter in which the manufacturer sells 60,000 vehicles, the credit will be 50% of the full credit amount. This part of the phase-out will last for two calendar quarters (6 months).

For the next two calendar quarters, the credit will be 25% of the full credit amount. The incentives for vehicles by that manufacturer will end thereafter.

In addition to the phase out rules, any vehicle purchased after December 31, 2010 will not be eligible for the credit.

See the US Government Data…