​Hybrid Car Tax Credits​​

There are Hybrid car tax credits for 2009 and 2010 cars, which offer great IRS benefits for owning a new fuel-efficient vehicle. These auto tax credits can be used to offset the price of the automobile or can be used for future repairs.

The government tax credits are all about alternative energy and fuel efficiency, and the government is using these cars to promote new incentives to reduce carbon emissions. There are new laws for plug-in electric drive cars, which can offer car owners a credit of up to $7,500. Moreover, just because one tax credit expired during the calendar year, doesn’t mean it won’t be available for next year.

Ford Motor Company is still offering a $1,700 government tax credit. The 2010 Ford Fusion is Ford’s latest hybrid model. Other automakers provided tax credits earlier in the year, while some are still offering a government incentive until later in the year.

According to the Internal Revenue Service, automotive tax incentives for hybrid vehicles can be filed under the new Plug-in Electric Drive Vehicle Credit if purchased after Dec. 31, 2009. To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of fewer than 14,000 pounds, and draw propulsion using a battery with at least four-kilowatt hours that can be recharged from an external source of electricity. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity.

There is also another law, which is almost the same thing, known as the Plug-In Electric Vehicle Credit. This creates a special tax credit for certain low-speed electric vehicles (including those with two and three wheels). The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012.

To qualify for the Plug-in Electric Vehicle Credit, a vehicle must be either a low-speed vehicle propelled by an electric motor that draws electricity from a battery with a capacity of 4-kilowatt hours or more or is a two- or three-wheeled vehicle propelled by an electric motor that draws electricity from a battery with the capacity of 2.5-kilowatt hours. The IRS says that a taxpayer may not claim this credit if the plug-in electric drive vehicle credit is allowable, meaning you can’t use two credits.

There is also a Conversion Kits law coming for plug-in electric drive conversion kits. The credit is equal to 10 percent of the cost of converting a vehicle to a qualified plug-in electric drive motor vehicle and placed in service after Feb. 17, 2009. The maximum amount of the credit is $4,000. The credit does not apply to conversions made after Dec. 31, 2011.

What better way to drive a new car than knowing you’re saving gas and reducing carbon emissions? We recommend that you consult with your tax planner or the Internal Revenue Service before using any of these credits for 2009. In addition, we will be updating the tax credit section for new hybrid cars with new related incentives as they become available.