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DATE News (chronologically)
01/17/08
automotive
Not all hybrids are taxpayers' friends
Green could turn into the new gold when it comes to promoting Earth-friendly cars and trucks. You can spot that marketing magic the minute you walk through the doors this weekend of the 2008 North American International Auto Show.

But if you get a little tempted -- and maybe remember hearing something about generous tax breaks for hybrid cars and trucks -- pay close attention to what you're buying. Buyers of the most popular Toyota hybrids no longer get a tax credit. And the Honda hybrids won't come with the hefty tax deals that they used to have, either. This tax credit has always been tough to understand. Currently, the credit applies overall to qualified purchases of hybrid and lean technology vehicles sold from 2006 through 2010.

And right now, anyway, there's no credit for plug-in hybrids -- even if some plug-ins make it to dealerships in 2010 or so.

Yet, the Alternative Motor Vehicle Credit, as it's officially called, varies based on manufacturer and model. The dollar amount of credits can change based on the fuel economy and weight of the model, as well as how many vehicles the manufacturer has already sold.

The first 60,000 hybrids or lean-technology vehicles sold per manufacturer -- and that clock started ticking in 2006 -- qualify for the full credit.

The cap was part of the compromise lawmakers made to win support for the credit from Detroit automakers, which did not want to give an unlimited benefit to Toyota and Honda.

And, no surprise, Toyota Motor Corp. and Honda Motor Co. each have hit the 60,000 sales limit.

Ford Motor Co. might hit the cap this year, but General Motors Corp. isn't anywhere close to that. And Chrysler doesn't even have a vehicle that qualifies for the tax credit in 2007 or 2008. Chrysler LLC announced this week that it plans to sell a hybrid Dodge Ram in the 2010 model year.

You can debate whether a cap makes sense at all if the idea is to encourage consumers to pony up the extra money it takes to buy environmentally friendly technology. But this is how the deal stands -- and it is something you need to know if you're shopping for green.

The Internal Revenue Service maintains an official list of what cars and trucks get what kinds of credits -- and who loses out on credits and when.

The government gets a quarterly review of the number of hybrid vehicles manufacturers have sold to dealers.

Once that 60,000 limit is hit, buyers gradually get a much smaller credit -- the credit is first cut in half and later cut into one quarter of the full amount of the tax credit. And down the road, the credit vanishes. More at Detroit Free press

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