The hybrid car has not come into the world without a shroud of rumors following carefully behind. From rumors of exploding batteries, electrical and digital nightmares, and poorly met expectations letting down consumers, the hybrid has had to struggle to overcome many misconceptions. Makers have not let myth and rumor keep them from creating better hybrids in new and old models. Toyota, Ford, Lexus, Honda, Nissan, Mazda, Dodge, Chevy, GM and Saturn are either in the process of creating, or have already, released several high performing hybrids. A total of 20 hybrid models are available, or are soon to be so. With just about every maker producing hybrids, incentives to keep the industry rolling are filling up the market with a fresh batch of rumors. The IRS is stepping up to explain as clearly as they can, what one of these options for the buyers of the most fuel efficient vehicles, really are shaping up to be. The Clean Vehicle adjustment being used for personal and business owners is helping to encourage the purchase of hybrid vehicles.
Some may still be skeptical since gas markets are so closely linked with politics for most of the world. The truth is that the government is actually interested in getting away from foreign fuel dependency. Getting more people to spend the extra money on a hybrid is being encouraged to help the market. The IRS is playing a major role in these incentives by offering tax credits. The catch is that one of these credits have limits based upon how many hybrids are sold of each model. After a point, the credits will be phased out. On the Federal level, these credits run from a few hundred dollars to more than $2,500 for buying the2006 Ford Escape. Apparently, like most IRS laws, the calculations for the credits are a complicated jumble of formulas based on how many of a model is sold, over a particular period of time. Luckily, most buyers of hybrids are successfully receiving the credits. Buying a Toyota or Honda hybrid requires that you're one of the first 60,000 people to purchase one starting in January 2006. The amount of the credit also depends on which percentage of the tax bracket one falls into. Buyers of hybrids in 2004 or 2005 were able to claim as high as a $2,000 deduction on their taxes. For those in the 15% tax bracket, the deduction fell to about $300.
The tax credits are based on the Working Families Tax Relief Act of 2004. According to the IRS, the credits will be phased out after 2006 and must be claimed for the year that the hybrid was purchased. Luckily, one can claim the back credit for up to three years from the purchase of the hybrid by using the 1040X form, or the Amended U.S. Individual Tax Return form. Another form related to hybrid owners is the IRS Publication 535. Mostly used for business expenses, this form can be used for almost anyone who owns a hybrid, whether or not they use it for business purposes.
While hybrid owners are also getting incentives on the state level with their state income tax returns and also with special car pool or HOV lane privileges, some believe that the incentives on the Federal level need to be even better. For example, the fact that the incentive will be as little as $500 for 2006, and thereafter, nonexistent, does not provide many people time to catch up with the extra money they will should purchase a hybrid vehicle in the first place. Many see the mainstream entry of hybrids into the automobile market as the sign that fuel efficiency and environmental concerns are becoming part of the American culture. One offset to the phase out of tax incentives for the purchase of hybrids is that the prices themselves are more attainable with each year. Right now, most people have to pay $5,000 to $9,000 more for a hybrid version of the car or SUV they want. That number is a bit more than most people are ready to pay yet, but with almost every major maker of vehicles producing hybrids, it is foreseeable that hybrid prices will get lower with each passing year, whether or not incentives are offered by the government.
Buying a hybrid is becoming quite an investment. The hybrid, which operates on both a gasoline engine and an electric engine, is offering much more than a decrease in gasoline cost. It also offers consumers the ability to directly help the environment. Hybrids are known to emit very few pollutants, especially when compared to conventional vehicles. It is stated that hybrids are up to 90% cleaner to the air than normal cars. This something the government is willing to reward hybrid drivers for.
Tax incentives for hybrid owners are one of the newest things offered. Hybrid owners are ecstatic about the new bill passed that gives them as much as $3,400 back. President Bush passed the bill as a new Energy Bill. The bill focuses on the environment but also on the fact that hybrids save on oil use. This directly affects the country's dependency on foreign oil. When a consumer purchases a hybrid, they are directly helping break the control many radical Islamists have over the United States through oil. These are the same individuals who hate the United States. Therefore, it is only logical the United States would want to reward hybrid owners for their smart purchases.
Many consumers find this new bill difficult to understand. The average consumer may joke that it takes an accounting degree to figure it all out. The formula used for the tax incentive involves the fuel efficiency numbers for 2002 vehicles. It works a little like this: If your car is between 25 and 50 percent more efficient than the average 2002 vehicle model, then the buyer will receive a $400 credit. The credit can grow as high as $2,400 if the new car is even more efficient.
The trick of the bill is that is also offers a combination of a conservation credit. This involves knowing a formula that tries to project how much fuel the car will save over its lifetime. The combination of the first half of the calculation and the second half of the calculation gives the tax benefit total. There are a few restrictions however that some consumers may not be aware of. One of the restrictions includes a credit cap for each automaker until 2010, which is set at 60,000 at this time. Other restrictions as described also restrict inclusion of certain hybrid models, especially those that are SUV hybrids or those purchased after 2005. All in all however, hybrid owners in general will profit from this tax benefit.
The bill may seem a bit confusing and limited at this time, but hybrid owners will likely benefit greatly from this tax incentive. Just leave it to your accountant to figure out the details and sit back to claim the reward. After all, not everyone understands every aspect of their personal taxes each year, but they still pay and collect on them. By giving hybrid owners this great incentive, the United States is not only rewarding current hybrid owners, but they are encouraging consumers that do not own hybrids to go out and purchase one.
The government is showing that hybrids not only help the consumer individually but they also help the country as a whole. If every car driven on the roads of the United States was a hybrid car, then the United States could potentially cut their oil needs down by 15%. This is an enormous number considering that the United States currently imports more than 11 million barrels of oil a day. Overall, the United States would be less dependent on oil for normal day-to-day activities and the cost of oil would be affected.
If you want to lower your personal gasoline costs then you should consider a hybrid. If you are interested in ways to help preserve the clean air of the environment, then you should consider a hybrid. If you are interested in the disadvantages of the dependency the United States has on foreign oil, then you should consider a hybrid. And most of all, if you are one that loves great government incentives, like the new Energy Bill that gives hybrid owners tax incentives, then you should certainly consider buying a hybrid.
Both Michael Plante & Gregg Hall are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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