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2005 ENERGY BILL - Prius $2750 Tax REDUCTION

Discussion in 'Gen II Prius Main Forum' started by IALTMANN, Aug 6, 2005.

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  1. IALTMANN

    IALTMANN New Member

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    Preliminary information I have is that:

    1) Both houses have passed this bill, the President indicates he will sign it into law.

    2) Hybrid cars and trucks and suv's are featured, and offer a direct TAX REDUCTION, based on 2002 CAFE standards and % EPA mileage improvement, from 2002 to 2005. Toyota's basis for the Prius is a compact model, and the savings in mileage are substantial.

    3) One magazine preliminarily calculated the Prius REDUCTION to be in the area of $2750.00., and this can be taken on cars purchased after 1/1/06, on the 2006 tax year tax return.


    Yipppeee.. it might even allow some 2005 buyers to sell their cars, buy a new one (note can be a NEW 2005, just has to be delivered AFTER 1/1/06)at no cost or almost no cost to them!!

    NOW THAT IS WHAT I CALL AN INCENTIVE !!!~!!
  2. IALTMANN

    IALTMANN New Member

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  3. efusco

    efusco Troll Slayer Staff Member

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  4. BTREPWR

    BTREPWR New Member

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    It's official. I noticed on the USAToday.com website that Bush signed the Energy Bill into law.

    Hmmm, time to put a deposit down on a 2006 and figure out what I'm going to do with my 2005. ;-)
  5. Erick

    Erick New Member

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    Yep, it's all signed, for better or worse.

    Now, when is he going to sign that darn Transportation Bill so us Californians can drive in the carpool lane!!!???
  6. davedog

    davedog New Member

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    BTREPWR, you can donate it to me if u need to toss it somewhere far ;)
  7. lgeisz

    lgeisz Junior Member

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    2 questions

    1. how do I apply for this tax reduction?

    2. Do I qualify for this tax reduction if I have already bought my Prius?

    Thanks
  8. IALTMANN

    IALTMANN New Member

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    1) You do not apply for it, your tax advisor will file for the REDUCTION in 2006, after you ADVISE HIM you have bought the car, and this must be AFTER 1/1/2006. If you do your own taxes, you have to submit forms I believe. I will find out and report back.

    2) If you have already bought a 2005, you only get a $2000 DEDUCTION., and you must obtain the forms to get the deduction and advise your tax advisor. So if your tax rate is 20%, your actual tax savings would only be $400.00.
  9. IALTMANN

    IALTMANN New Member

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    EFUSCO: Since now both houses and also today the president signed this bill, which was being held up by Democrats over the MTBE and Artic Drilling issues, this was not a done deal. Now Bush has negotiated, and given up on some things. Note that both HYBRID AND HYDROGEN technologies are encouraged. also some energy improvements for the home. On our front the TOYOTA PRIUS enjoys one of the HIGHEST tax deductions possible, thought now that this was a REALITY, some of your BUSH NAY sayers, might have something nice to say about him. Heck I complimented Clinton on his passage of the Pregnancy Hospitalization term, which he and the Democrats really wanted against the hospital and insurance lobbies. I agreed with the fact that a woman with a "C" section, did not need to be discharged automatically in 24 hrs or less. So I thought this was a good thing for us PRIUS OWNERS. Bush has signed this bill.
  10. IALTMANN

    IALTMANN New Member

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    PS Can Bush get a compliment for this one??
  11. efusco

    efusco Troll Slayer Staff Member

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    Immanual,
    Not sure why that was directed to me. I was just answering your question as to why there'd been no replies. At the time you posted this thread it still had not been signed by the president.

    Like all things Washington there is good and bad. This credit is good, for those who qualify. It's pretty limited and Toyota will use up it's 'credit' before the middle of 2006.

    Down side of the bill is that the auto lobbiests, I'm sure with the support of big oil, successfully avoided any requirement for increasing the fuel economy of their vehicles. Now they can each produce one 'token' hybrid or something and then keep putting out 12mpg SUVs without any incentive to stop that at all.

    So yea, if you want a compliment I'll give it for the tax credit and for the energy bill in general, but it leaves a lot to be desired and still shows how much W is in the back pocket of big oil. But it's a start.

    Something for the Dems to build on starting in '08!! :wink:
  12. IALTMANN

    IALTMANN New Member

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    Thank you Dr Evan..at least you did acknowledge that GW (gets the blame, and get the credit) did something...
  13. lgeisz

    lgeisz Junior Member

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    :cry: Thanks for the info IALTMANN sadly I have already purchased my Prius so no $2000 for me :(
  14. micheal

    micheal I feel pretty, oh so pretty.

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    Am in the only one who is thinking how nice it would have been to have this reduction back in 2004 (or 2005 for that matter). Thankfully we didn't pay much tax, but another $300 in return would have been really nice. :(
  15. kirbinster

    kirbinster Member

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    This new bill will actually hurt Prius sales if you read it carefully. Only the first lucky 60,000 with some unannounced overage will qualify for the credit. After that, it goes to zero! So this is a slap at Toyota which has the most hybrids and is designed to help other players get into the hybrid game. Since Toyota estimates they will sell double this number of Prius in '06 not to mention HiHy and others, you better act this year to get one very early in the new year if you want the windfall.

    Here is the actually reduction formula:

    Hybrid Car Tax Credit Phase-Out Details


    Beginning January 1, 2006 and up through the quarter that the automaker sells 60,000 hybrid vehicles, 100% of the credit is allowed.
    100% of the hybrid car tax credit continues for the next consecutive quarter.
    The next two quarters after that, the tax credit is reduced to 50% of the original hybrid car tax credit.
    Then, for the next two quarters after that, the tax credit is reduced to 25% of the original hybrid car tax credit.
    Finally, the hybrid car tax credit for that automakers’ hybrids drops to zero.

    Since they talk about manufacturer I assume anything put out under the Lexus badge counts against Toyota as well.
  16. wstander

    wstander New Member

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    I hardly think that SUV sales will rise or fall on the whim of CAFE standards; I get passed all of the time by 80mph SUVs burning $3/gallon gas. A look around any parking lot shows a lot of SUVs driven by one person!

    Face it people, for whatever reason, large SUVs sell well in this country and even Saint Toyota is playing up to the big SUV crowd. One does sell what one can, you know, and Toyota and GMC have found a ready market for high-profit vehicles in SUVs. BTW: Sales of SUVs is what makes enough excess money to research and develop alternate fuel vehicles.
    My neighbor drives a Lincoln Navigator and a Mercedes SL500; her husband has a Dodge 2500 pickup. They use the Navigator to tow the 22ft boat to the river every 3-4 months. She would love to have a Prius (for the utility and features, NOT just the economy), but is rather stuck...

    Should we just burn her at the stake now;-P???
  17. IALTMANN

    IALTMANN New Member

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    lgeisz

    Hey for the current owners, who bought theirs NEW in 2004 and 2005., you can file for a tax deduction of $2000.00 under current law. The new Energy Tax Bill, allows for TOYOTA to sell a set number (60,000 includes all HYBRID MODELS) OF hybrid cars and SUV's. Most estimates are that this credit of $2750.00 is only good for about 6 months, then for 2 quarters later, (6 months) you only get 1/2 of $2750, then down to 1/4 of $2750, then ZERO, so in 2006 BUY early, if you want the Tax REDUCTION, and note: this is a REDUCTION not deduction. The incentive is there basically for NEXT YEAR only, preferably the 1st six months, and you need to document and find out about the MFG status, thru tax accountants or the dealership. It is not the best thing, but better then the current $2000 tax deduction (I bought mine 6/23/05), so I will get the $2000 tax deduction for 2005 TAXES. If you say buy one on 1/15/06, you get $2750 CREDIT OR REDUCTION in overall tax due, act fast after the 1st of the year, if you go that way. If you order one, request delivery no sooner then 1/1/06, even if it is a 2005 model.

    Bottom line if you got a 2004 or 2005 you can take the deduction, re-file for 2004, and file accordingly in 2005. In 2006 you really get a good turn if you act early. Any decent tax accountant, even H&R Block will have the details, as well as the IRS, libraries, post offices, and all the chain Office stores. You do have to take the initiative to get your tax advantage, the GOVT is not going to make it easy.
  18. andyz

    andyz New Member

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    I received a very comprehesive analysis from the US Department of Energy Alternative Fuel Hotline in Colorado. I tincluded links to various other sites, including the recent IRS Bulletin on the subject.

    This is what was sent to me;

    This email is from the U.S. Department of Energy’s (DOE) National Alternative Fuels and Clean Cities Hotlines in response to your request for information about the effects of the Energy Policy Act of 2005 on hybrid electric vehicle purchasing incentives. This credit is very complicated, but it generally provides more purchasing incentives that available in previous years.



    The incentive is written in law as a CREDIT, not a DEDUCTION. The text of the law that establishes the new hybrid electric vehicle tax CREDIT begins with the statement below:

    “IN GENERAL- For purposes of subsection (a), the new qualified hybrid motor vehicle credit determined under this subsection for the taxable year is the credit amount determined under paragraph (2) with respect to a new qualified hybrid motor vehicle placed in service by the taxpayer during the taxable year.â€

    Therefore, the new credit is based on language that the taxpayer is entitled to the incentive the same year the vehicle is placed in service. Because we are not tax advisors, and our assistance is not considered “official guidance,†we suggest you contact the IRS Office of Associate Chief Counsel, Passthroughs and Special Industries at 202.622.3120. This is the office that handles the currently available deduction which is being phased out when the new credit takes effect next year. They might be able to offer some assistance with the interpretation of the incentive and the ability for taxpayers to realize the incentive. Again, there has been no “official†guidance from the IRS on this new credit yet. The incentive must still be incorporated into the IRS Code, and the IRS must establish a system for individuals to actually take the incentives.



    Because the bill establishing the new hybrid vehicle credit was signed only a few days ago, please note that dealers might not be aware of how this will begin to affect their customers. Familiarizing yourself with the currently available deduction might help further your understanding of this issue. The currently available deduction is explained in IRS Publication 535, Chapter 12 (http://www.irs.gov/publications/p535/ch12.html). The FAQ “What is the difference between a tax credit and a tax deduction?†at http://www.eere.energy.gov/afdc/progs/ddow...afdc/FAQ/20/0/0 may also help. The selection from the energy bill can be found on the federal legislative search engine http://thomas.loc.gov under House Report 109-190 - ENERGY POLICY ACT OF 2005, Subtitle D, Sec. 1341.



    Calculating Your Tax Credit:

    As there has been no official guidance issued on this topic yet, our calculations are based on the information provided in the text of the House Report 109-190 - Energy Policy Act of 2005 (you can view this online at http://thomas.loc.gov). According to our calculations, a Toyota Prius would be eligible for a $2750 tax credit beginning in January 2006 (Please note, the new credit applies to property placed in service after December 31, 2005). This is a combination of two calculations: the fuel economy credit and the conservation credit (see calculations below). Again, as there has been no official guidance published on this topic yet, we suggest you continue to reference the Internal Revenue Service Web site (www.irs.gov) for updates and official calculations.



    Data (using the Toyota Prius)

    Model Year 2005 Prius city fuel economy as estimated by the U.S. EPA: 60 mpg

    Model Year 2005 Prius vehicle inertia weight class is: 3000 lbs.

    The corresponding 2002 model year city fuel economy for that vehicle inertia weight class is: 26.4 mpg



    Fuel Economy Credit

    The Prius would achieve about a 227% increase in fuel economy over the 2002 fuel economy standard set forth in the energy bill. This makes the vehicle eligible for a $2,000 tax credit according to the following table:



    In the case of a vehicle which achieves a fuel economy

    (expressed as a percentage) of the 2002 model year city fuel economy) of-


    The credit amount is--

    At least 125 percent but less than 150 percent
    $400

    At least 150 percent but less than 175 percent
    $800

    At least 175 percent but less than 200 percent
    $1,200

    At least 200 percent but less than 225 percent
    $1,600

    At least 225 percent but less than 250 percent
    $2,000

    At least 250 percent
    $2,400.




    Conservation Credit

    Add to that the conservation credit amount of $750, calculated as the difference between:

    (A) 120,000 divided by the 2002 model year city fuel economy for the vehicle inertia weight class, and

    (B) 120,000 divided by the city fuel economy for such vehicle



    With reference to the following table:



    In the case of a vehicle which achieves a lifetime fuel

    savings (expressed in gallons of gasoline) of--


    The conservation credit amount is--

    At least 1,200 but less than 1,800
    $250

    At least 1,800 but less than 2,400
    $500

    At least 2,400 but less than 3,000
    $750

    At least 3,000
    $1,000.






    Please keep in mind that the bill caps the number of people who can claim the deduction at 60,000 for each automaker until 2009, so the sooner you purchase the vehicle, the better. We suggest you also read the explanation of the credit provided at http://www.hybridcars.com/oil-dependence-p...olicy.html#bill. For information about additional incentives that may be available from your state, please see the Alternative Fuels Data Center Incentives and Laws Web site (http://www.eere.energy.gov/afdc/laws/incen_laws.html). Please let us know if you have additional questions.



    * * * * *



    Please contact the DOE’s National Alternative Fuels Hotline at 800.423.1363 or hotline@afdc.nrel.gov, or the Clean Cities Hotline at 800.CCITIES or ccities@nrel.gov, if you have any additional questions, would like hard copies of any of the documents found on the Alternative Fuels Data Center (AFDC) Web site (http://www.eere.energy.gov/afdc/), or would like to subscribe to either of two free e-newsletters, Clean Cities Now and/or the AFDC Monthly Update.





    Thank you,



    Stacy Putnam

    ICF Consulting

    Supporting the U.S. Department of Energy's

    National Alternative Fuels and Clean Cities Hotlines



    National Alternative Fuels Hotline

    800.423.1363

    hotline@afdc.nrel.gov

    http://www.eere.energy.gov/afdc/



    Clean Cities Hotline

    800.CCITIES

    ccities@nrel.gov

    www.eere.energy.gov/cleancities/
  19. IALTMANN

    IALTMANN New Member

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    andyYZ

    Good job, $2750 estimated credit...first 60,000 units sold till 2009....Everybody BUYING A 2005 / 2006 AFTER 12/31/05, cut and paste this into a Word Doc., or other so that you can refer to this later when filing for 2006 TAX YEAR. You can also use this for current information for the $2,000 tax deduction that is current law.
  20. IALTMANN

    IALTMANN New Member

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    HERE IS THE CURRENT INFORMATION FOR OWNERS WHO CURRENTLY OWN & BOUGHT A HYBRID CAR IN 2004/2005, NEW FOR PERSONAL USE:

    2004/2005 Federal Tax Deduction: Hybrid Electric Vehicles
    Disclaimer
    The information on this page should not be viewed as an
    offi cial or legally binding document. Other requirements
    or exceptions may apply. For more detailed information,
    please consult an IRS tax representative and/or offi cial
    IRS publications (www.irs.gov).
    Can I get a tax deduction for my HEV?
    YES. The Federal Clean-Fuel Vehicle property tax deduc-
    tion can be claimed for qualifying hybrid electric vehicles
    (HEVs). The deduction applies to both personal and busi-
    ness vehicles. To qualify for the Clean-Fuel Vehicle tax
    deduction, vehicles must be certified by the Internal
    Revenue Service (IRS) as being eligible for the deduction.
    How much can I deduct for my HEV?
    Owners of certified vehicles can claim a one-time deduc-
    tion of $2,000 for the year the vehicle is first used, if that
    year is before 2006. In 2006 the deduction is scheduled
    to drop to $500.
    What other requirements are there
    for claiming the deduction?
    You must purchase the vehicle new and for your own use
    (not for resale) and drive it mostly in the United States.
    The deduction cannot be claimed by government agencies,
    tax-exempt organizations, or foreign entities.
    Where on my tax form do I put the HEV deduction?
    For the 2004 and 2005 tax years, the tax deduction is taken
    as an adjustment to income on IRS form 1040 in the
    “Adjusted Gross Income†section. For the 2004 tax year,
    enter the amount of the deduction and the words “Clean
    Fuel†on line 35. You can claim it whether you itemize
    or take the standard deduction. For vehicles purchased
    solely for business use, claim the deduction on the “other
    expenses†line of Schedule C (1040) or Schedule F (1040).
    What if I bought my car before 2004?
    You can file an amended tax return (Form 1040X) to claim
    the deduction for the tax year in which you purchased the
    vehicle. Generally you can amend returns for up to three
    years from the original return’s due date.
    Will HEVs be eligible for tax deductions
    in the future?
    The deduction will remain at $2,000 for tax year 2005.
    In 2006, the deduction is scheduled to drop to $500.
    After 2006, the IRS does not expect to allow a deduction.
    * The IRS continually certifies new HEV models. Check the IRS Web site at www.irs.gov for the latest information on qualified vehicles. 2005 Available Light-duty HEVs*
    Manufacturer Model IRS Certifi ed? Model Year
    Ford Hybrid Escape Yes 2005
    Toyota Prius Yes 2001-2005
    Honda Civic Hybrid Yes 2003-2005
    Honda Insight Yes 2000-2005
    Honda Accord Hybrid Yes 2005
    April 2005 Fact Sheet
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