Hybrid Tax Breaks for Cars & Vehicles
There are many tax breaks available for the purchase of a hybrid vehicle. The Energy Policy Act of 2005 allows for a credit on your return if you purchased a hybrid vehicle. It is called the Alternative Motor Vehicle Credit. This act replaced the previous clean-fuel burning deduction. It offers you a credit rather than a deduction. This means a specific amount will reduce the amount of tax liability you owe.
Who will get the credit?
The credit will only be offered to the original purchaser of the car. The credit does not apply to used hybrid vehicles. If you leased the car then the credit will actually go to the company that leased it to you. This may be something to consider when you are making the decision to either purchase or lease. This credit applies to vehicles purchased on or after January 1, 2006. This credit is only good for qualifying vehicles acquired before January 1st 2011. You will need to use form 1040 to claim the credit.
The credit amount will vary depending on when you purchased the vehicle and what type of vehicle. The credit amounts can start from around $500.00 and go all the way up to $3,150.00. The credit amount will be lowered depending on what time of year you bought the car. The IRS suggests purchasing the vehicle early in the year to be able to take the entire allowable amount. If the manufacturer of the hybrid vehicle you purchased exceeds sales of 60,000 vehicles sold, then the amount of your credit will be reduced and possibly even eliminated.
TurboTax Online offers free tax calculators to help you determine the amount of credit you may be eligible for. Visit TurboTax Online to take advantage of their biggest refund guarantee.