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A Cut on Hybrid's Tax

The energy bill that has reached the President of the United States has finally turned into law by virtue of President Bush's signature. Said law includes a provision that gives consumers incentives and tax privileges. Moreover, the greatest stir is the hybrid tax credit.

Hybrid tax credit allows consumers to slash tax bills by ,700 to ,000 depending on the hybrid model. Hybrids that are capable of saving the most fuel will be given greater tax privileges. However, the consumers covered by said provision are only those who are going to purchase hybrids from January 1 and onwards. According to David Friedman of Union of Concerned Scientists "It's not a home run, but a good, solid double."

Said legislation is aimed at saving energy and reducing air pollution. Hybrids contribute to the aim of saving gas by combining electric motor with the internal combustion engine. The mentioned legislation is also applicable to the new generation of fuel-saving diesel cars. The tax privilege is to expire at the end of 2009. However, for some hybrids, the privilege is expected to linger. For every automaker, tax breaks are only available to a total of 60,000 vehicles.

In the present time, consumers get a ,000 income-tax deduction for purchasing a hybrid. Deductions are due to fall to 0 next year. Tax credit can also be availed of by consumers. Compared to deductions, tax credits are more valuable. This is because credit represents a dollar-for-dollar cut in the taxpayer's bill.

In regard to said legislation, Toyota is aiming to sell 100,000 Prius hybrids this year. Martha Voss, spokesperson of Toyota, says: "Hybrids only account for 1% (of new vehicle) sales, so there is still a need." She further noted that Prius could qualify for at least a ,400 credit. It can be recalled that Toyota is one of the giant names that prioritizes fuel-saving. This is manifested in the manufacturing of Toyota Prius auto parts, which are incorporated in its hybrid vehicle.

Ford Motor Co. is also making way for its three additional hybrids. These hybrids will also benefit from the legislation.

About the Author: Jennifer Dylan is a 35-year-old gal who hails from San Francisco. She has a habit of updating herself on new car trends and models. She spends most of her time reading up on cars and hopes to test drive them. She works for one of the topnotch car parts dealer in the U.S.

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