Tax benefits for buying an energy efficient car

| 29 Sep 2011 | 09:00

    Individuals can get a tax break from making energy-conscious purchases during 2006 when filling out their tax returns next year. These benefits include tax credits for various types of alternative motor vehicles, including hybrid vehicles. The tax credit for hybrid vehicles applies to vehicles purchased on or after Jan. 1, 2006. The hybrid vehicles currently acknowledged by the IRS and their credit amounts are: 2007 Ford Escape Front WD Hybrid - $2,600 2007 Ford Escape 4 WD Hybrid - $1,950 2007 Mercury Mariner 4 WD Hybrid - $1,950 2007 Toyota Camry Hybrid - $2,600 2005 Toyota Prius - $3,150 2006 Toyota Prius - $3,150 2006 Toyota Highlander 4WD Hybrid - $2,600 2006 Toyota Highlander 2WD Hybrid - $2,600 2007 Lexus GS 450h - $1,550 2006 Lexus RX400h 2WD - $2,200 2006 Lexus RX400h 4WD - $2,200 2006 Ford Escape Hybrid Front WD - $2,600 2006 Ford Escape Hybrid 4 WD - $1,950 2006 Mercury Mariner Hybrid 4 WD - $1,950 2005 Honda Insight CVT - $1,450 2006 Honda Insight CVT - $1,450 2005 Honda Civic Hybrid MT and CVT - $1,700 2006 Honda Civic Hybrid CVT - $2,100 2005 Honda Accord Hybrid AT and Navi AT - $650 2006 Honda Accord Hybrid AT w/updated calibration and Navi AT w/updated calibration - $1,300* 2006 Honda Accord Hybrid AT and Navi AT without updated calibration qualify for a credit of $650. Starting in 2006, this tax credit replaces the tax deduction of $2,000, which was previously allowed for taxpayers who purchased a new hybrid vehicle before Dec. 31, 2005, for the clean-burning fuel deduction. The tax 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 qualify for the tax credit. Consumers seeking the credit may want to buy early since the full credit is only available for a limited time. Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of at least 60,000 vehicles. For the second and third calendar quarters after the quarter in which at least 60,000 vehicles are sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter. For more information and a complete listing of all qualified hybrid vehicles as they become available, visit IRS.gov