Tax Credits for Buying a Hybrid Car are Disappearing Fast

By dancurranjr On April 7th, 2009

irsHybrids are a victim of their own success.  The more of them we buy — to save gas and save the environment — the less Washington thanks us by giving us a tax credit.  If you want a $3,400 tax credit on a hybrid, you have to buy a hybrid on or before Tuesday, March 31, 2009.

In a perverse, backwards and just plain dumb law from the very same Congressmen who posture about reducing oil imports and reducing global warming, the federal tax credit applies only to the first 60,000 hybrids a manufacturer sells.  So forget about getting money back — except at the gas pump — for buying a Toyota Prius, or any of the other hybrids from Toyota or its sibling Lexus.  Ditto no tax credit for buying a Honda hybrid, including the brand new Honda Insight.   That’s because both Toyota and Honda have sold more than 60,000 hybrids in the US.

And now, the #3 hybrid manufacturer is nudging the limit, too.  That’s Ford.  Yes, Ford, which makes the Ford Escape Hybrid and its twin SUV, Mercury Mariner Hybrid, the Ford Fusion Hybrid mid-size sedan and its twin the Mercury Milan Hybrid.  More than 80% of hybrids Ford manufacures are Escapes.

So, if you want to claim thefull $3,400 tax credit, do it by March 31.  After that, the hybrid tax credit is cut in half — to $1,700 — through the end of September.  Then, it gets cut again, to just $850, until March 31, 2010, when the tax credit disappears entirely.  Of course, you have more time to buy a General Motors hybrid — sales of the Chevrolet Malibu hybrid and Cadillac Escalade hybrid are nowhere near 60,000 yet.

Hybrids are hot, of course, because of their fuel economy.  The EPA rating for the hybrid Escape and Mariner is a very respectable 34 mpg city and 31 mpg highway. More than respectable — they get the best gas mileage of any SUV in their class.  And, the Fusion and Milan are top-rated in their mid-size segment, at 41 mpg city and 36 mpg highway.  That’s better than either the Toyota Camry Hybrid or Honda Accord — a fact that Ford is advertising heavily.

Maybe this 60,000 law was written to give Detroit some breathing room to catch up with Tokyo.  Maybe not.  But whatever the reason, as I said before, it is just plain backwards, dumb and other words my editors won’t allow me to include here, for lawmakers to encourage us to buy more hybrids, and then take-away the very tax credits that bring down the cost.  Remember, hybrids cost more than comparable models which aren’t hybrids.


Leave a Reply