Monday, March 23
Posted 2 p.m. EDT
If you've been considering a Ford hybrid, you better act fast or you won't get the maximum tax break for buying one of the manufacturer's fuel-efficient cars.
How fast? Nine days fast. The federal tax credit for a Ford hybrid will be cut in half April 1.
Apparently part of the reason that Ford didn't want any auto bailout money is because it was selling a fair amount of cars, including hybrids. Enough Ford and Mercury hybrids were driven off dealer lots last year to trigger the phaseout of that manufacturer's tax credits.
By Dec. 31, 2008, Ford had sold 66,157 hybrid vehicles. Under the law that created the tax break back in 2006, once a car maker hits the 60,000 sales mark, future buyers will get less of a credit.
Ford phaseout schedule: Car buyers, however, get a bit of a grace period. A manufacturer's full hybrid tax credit remains in effect for three months after the calendar quarter in which it sells its 60,000th hybrid.
Since Ford hit 60,000 mark in the fourth quarter of 2008, buyers of Ford's eligible hybrids, as well as those bearing the company's Mercury nameplate, can get the full credit for purchases through the upcoming March 31.
But on April 1, the Ford and Mercury hybrid tax credits are cut in half. That reduced credit runs through Sept. 30 of this year.
After that, the credit is reduced again. Buy a Ford or Mercury hybrid between Oct. 1 of this year through March 31, 2010, and you'll get to claim only a quarter of the vehicle's original credit amount.
And when April 1, 2010, rolls around, the credits for Ford and Mercury hybrids disappear.
Ford is first: Ford is the first, and likely the only, U.S. auto maker to face reduced hybrid tax credits. Well, technically, it is Ford buyers who will face the smaller tax breaks.
At the end of last year, General Motors had sold just 33,832 hybrids. The IRS sales report didn't list any numbers for Chrysler products.
All credits are set to expire at the end of 2010, regardless of how many vehicles a company has sold. So the chances that the struggling GM and Chrysler will be able to reach 60,000 hybrid sales before then are slim. The good news is that if the companies survive, they'll likely be offering drivers among the larger hybrid tax credits.
Given the new president's more pro-environment stance, it wouldn't be a big surprise to see the hybrid credit revived in some form. In fact, Obama's first stimulus package, the American Recovery and Reinvestment Act he signed into law Feb. 17, includes a new tax credit for the purchase of plug-in hybrid vehicles.
Of course, the plug-ins are still primarily in the development phase. But the original hybrids are still rolling onto roads. So if you want a Ford or Mercury hybrid, plus the biggest possible tax break, head to your local dealer by March 31.