Irs Approves Tax Credits for a Variety of Toyota Hybrids

Individuals who purchase hybrid cars will receive a tax credit rather than a tax deduction beginning in 2006. The IRS has only recently begun to release the exact amounts you can deduct on your new hybrid.

The IRS issues tax credit certification to a number of Toyota hybrids.

The tax benefits of driving a hybrid vehicle were significantly altered by the Energy Policy Act of 2005.Tax deductions, on the other hand, simply lower your adjusted gross income before calculating how much tax you owe using the tax tables. This conversion is a good thing in layman's terms.

A tax credit is not available for every hybrid vehicle. The IRS must first assess it before issuing instructions on which vehicles qualify and how much of a credit you can claim for each. The IRS can assign a maximum of $3,400 per vehicle. The following are the figures it recently released for several Toyota hybrid cars.

$3150 for a 2005 Toyota Prius

$3150 for a 2006 Toyota Prius

$2600 for a 2006 Toyota Highlander 4WD Hybrid

$2600 for a 2006 Toyota Highlander 2WD Hybrid

$2200 for a 2006 Lexus RX400h 2WD

$2200 for a 2006 Lexus RX400h 4WD

If you bought your hybrid automobile before 2006, you can only claim a tax deduction up to the amount set by the IRS, which is normally $2,000. With a few caveats, you can claim the aforementioned sums if you waited until 2006. To begin with, the sum only applies to the first 60,000 vehicles sold in each model. You can only claim half of the tax credit if you buy a hybrid in the 60,0001 to 120,000 sales range. Sales of 120,001 to 180,000 can claim a portion of the above-mentioned amount. You are just as you areIt's a little unclear who is intended to know the sales data, but Toyota will definitely take steps to clarify it.

From an environmental standpoint, hybrid vehicles make sense. With huge gas expense reductions and a sizable tax credit, they should sell quickly.