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Tax Incentives for Hybrids, Other Greeen Cars Likely to End

Posted on December 14, 2010
Filed Under Tax Information | Leave a Comment

Save for a holiday miracle from outgoing U.S. lawmakers, a host of tax breaks for fuel-savvy car buyers will go away in less than a month.

But one group that won’t be shorted are electric car purchasers.

“Credits are expiring once and for all on a huge swath of new cars, unless there’s a successful lame-duck effort in Congress to extend them,” said Carroll Lachnit, features editor of Edmunds.com.

The online automotive resource said potential buyers should note the tax break situation when deciding whether to purchase a hybrid or alternative fuel vehicle.

Hybrid, diesel and compressed natural gas vehicles purchased after Dec, 31, 2010 will no longer be eligible.

“But the tax credits for plug-in hybrids like the Chevy Volt and electric vehicles like the Nissan Leaf are likely to remain in effect for several years,” Lachnit said.

Ron Montoya, features writer with Edmunds.com, cautioned that, “Tax credits aren’t the only factor to consider, especially since buyers have to wait until spring to realize the savings,”

Meanwhile, dealers may boost prices for the most desired vehicles, which could cut into the tax savings, according to Edmunds.

For some models, buyers will realize better savings if they wait until ‘hot’ models cool off, said Montoya, citing the Honda Civic GX and Hyundai Sonata Hybrid as examples.

Dozens of new models have been eligible for the federal tax credits in the past three model years. They include:

  • The special Honda Civic GX sedan powered by Compressed Natural Gas, whose few would-be buyers could receive $4,000 credits at least if they purchase before the end of the year.
  • Audi, BMW, Mercedes-Benz and Volkswagen, which manufacture models that are eligible at least until Dec. 31 for a diesel credit. Tax breaks start at $575. The highest are $1,800 for the BMW X5 xDrive35d sport utility and for the Mercedes GL-Class320 BlueTEC sport utility.
  • The 2011 Nissan Leaf hatchback and the Tesla Roadster two-door convertible. Purchasers can apply for a $7,500 electric tax credits. Similarly, buyers of the 2011 Chevrolet Volt four-door hatchback can get a $7,500 plug-in hybrid credit.
  • Various car and truck models built by BMW, Cadillac, Chevrolet, Chrysler, Dodge, GMC, Mazda, Mercedes-Benz, Nissan and Saturn. They make hybrid models, and owners of new models can receive a hybrid credit at least until the end of 2010. The credit begins at $900. At the top end is a $2,350 credit for buyers of the Nissan Altima Hybrid sedan.

Edmunds.com notes that credits begin to phase out for a manufacturer’s vehicles once it sells a predetermined total.

In many cases, most notably with hybrid models from Ford, Honda and Toyota, the federal tax programs have already been phased out.

The credits can be used only by the original owner. If leasing a vehicle, the automaker may claim the credit and pass the savings on to the consumer, according to Edmunds.com.

The full list of vehicles eligible for the tax credit can be found online at Edmunds

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