 Tax credits for hybrid car purchases
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 Dear
Tax Talk,
Can you still get a tax credit for the purchase of a hybrid car? If so, how much?
-- Jim
 Dear
Jim,
That depends on when you buy it and how many hybrids the manufacturer
sold prior to your purchase of the car. First, the credit applies
to cars purchased after Dec. 31, 2005. Second, it can't be a lease.
Third, the tax credit starts to be reduced after the manufacturer
sells 60,000 units.
After the 60,000th unit is sold, the credit is reduced for that manufacturer to 50 percent in the second and third quarters following the quarter that the 60,000th unit was sold. In the fourth and fifth quarters following the milestone, the credit is reduced to 25 percent. No credit is allowed after the fifth quarter.
The earliest reductions would not take effect until July 1, 2006, for a manufacturer who reached the 60,000th unit by March 31, 2006. The 50 percent would apply to vehicles purchased from that manufacturer between July 1 and Dec. 31, 2006, and the 25 percent credit would apply between Jan. 1, 2007, and June 30, 2007.
IRS has published a table of credits on its Web site. By the way, Toyota hit the 60,000th unit in June 2006, so you have to buy a Toyota or Lexus by Sept. 30, 2006, to get the 100 percent credit. Ford and Honda, the other two predominant makers, are not close to the limit.
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