Popular hybrid credits gone, but others remain
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Other vehicle and credit alternatives
Honda is the leader in another fuel-efficient auto area: the compressed natural gas, or CNG, vehicle. The energy legislation that created the hybrid credit also included tax breaks for three other fuel-efficient vehicles: advanced lean burn, fuel cell and alternative fuel.

Alternative-fuel vehicles run on compressed or liquefied natural gas, liquefied petroleum gas, hydrogen or any liquid that is at least 85 percent methanol. Honda's Civic GX operates on compressed natural gas and the IRS has certified its 2005 through 2008 model years as tax-break eligible.

CNG vehicles have two advantages over hybrids when it comes to taxes. The credit is usually larger and it does not phase out.

Home highway advantage
Domestic manufacturers have remained a lap down to Toyota and Honda in the hybrid race. That's why the provision penalizing the Japanese hybrid leaders was added to the energy bill.

"It's obvious that our government has a problem with creating an energy policy with any kind of vision," says Bradley Berman, editor of HybridCars.com. "The creation of the 60,000 cap was by and large designed to cut some slack to Detroit automakers, who are way behind."

Berman says the credit isn't likely to convert someone who was not even considering a hybrid. At best, it will simply make a potential hybrid buyer look a little more closely at all the alternative fuel makes and models.

Overall automotive costs are a bigger drive when it comes to picking a particular car, Berman says.

"Gas prices have a greater impact than the tax credit. People tend not to think of a large purchase in the big picture over the course of several years," he says.

"There are too many factors -- maintenance, resale value, interest rate on your loan -- that have a pretty significant impact over the long-term analysis of whether an auto purchase is a sound financial decision."

Cindy Knight, environmental communications administrator for Toyota in Los Angeles County, agrees, saying it was difficult for Toyota to determine whether the company's hybrid-leading sales were helped more by the tax break or high gasoline prices.

"We think that the tax credit is really nice," Knight says. "But we're not sure that it really influences a buyer. There's a combination of factors that makes a hybrid a popular choice right now."

Freelance writer Kay Bell writes Bankrate's tax stories from her Austin, Texas, home. She also writes two tax blogs, Eye on the IRS for Bankrate and Don't Mess With Taxes, and is the author of the book "The Truth About Paying Fewer Taxes."