Pending Hybrid Incentives PPT from Washington

The $3000 Federal deduction will come out to about $300 for most people.

You see, it's a deduction and not a credit.

But the Georgia one seems to be a true credit.

The Timberland deal is a good one two. $3000. But does that then get considered as income? If so, then it wipes out the Federal deduction.

 

The CURRENT tax year incentive is (effectively) a tax DEDUCTION of $2,000.

The Energy Policy Act of 2005 that is due to be signed by the President on Monday is a federal tax CREDIT beginning for sales on January 1, 2006 based on fuel economy improvements by vehicle weight class over 2002 model year city EPA. By my calculations, if the 2006 Prius gets a 60 city EPA, it will be in line for a $2,750 CREDIT . If it drops between 55-59, it will be a $2,350 CREDIT.

 

WOW, I misunderstood it. This turns it into some real money.

Sorry for my mistatement. I have not actually read the law and assumed it was still going to be a deduction.

Thanks for the correction.

 

What is the difference between a tax credit and a tax deduction?

 

Tax credit is a dollar for dollar reduction of your taxes.

A deduction reduces your taxable income and as a result you only save the sum of your tax rate times the deduction, i.e., if your tax rate is 25% you save $500 in taxes with a $2,000 deduction.

 

So Prius models purchased after 1.1.06 will effectively come with better tax benefits than what the government currently offers?

 

Yes.

 

Thanks!

 

Another view of the energy bill.

 

The credit only applies to the first 60K qualifying cars from any one manufacturer.

With all the hybrids Toyota has out or is coming out with, that will be over with very quickly.
I'd like to know how the feds are going to expect the taxpayer to figure out if they qualify or not.
Maybe a voucher or letter from the manufacturer?

 

Actually, the credit starts going down after the first 60k, it doesn't end. But this does not change the point of your post.

This is a GM/ Ford protection clause, to give them time to catch up. Sadly, I suspect GM and Ford will continue to makes stupid shortsighted decisions, and taspayers will be asked to assist them again and again and again, until maybe Toyota buys them outright circa 2014.

 

Dan, the 60K is not a drop-dead number (as erroneously reported by the media), it is only a trigger to a phase out calendar. Delivery #60,001 will fully qualify, and realistically, based on Toyota's production projections of the Prius, 150,000 or so units could reasonably fully qualify.

First, all sales within the same calendar quarter AND the subsequent quarter from when the 60K delivery number is hit will fully qualify.

Then, for the subsequent 6 months, the tax credit will be 50% of the full.

Then, for the last 6 months, the tax credit will be 25% of the full.

There will be even more confusion as the tax credit is based on improvement in fuel economy over a 2002 city EPA baseline by weight class. I think this is a great thing, but that means there will be much different tex credits for each model of hybrid vehicle. The Insight will do the best, of course, and they Highlander will probably qualfy for something, but not nearly as much as the Prius. All things remaining the same (especially its city EPA rating), the Prius is in line for a $2,750 tax credit.

 

Yes, I knew about the grace extention. Didn't want to fully get into that. But it is quite probable that the full credit will not apply to the whole year.

Again, how is a taxpayer supposed to know if he is 60,001 + 6 months?

 

Since the 60K is such an important trigger number for each manufacturer, I'm sure it will be well-known when each manufacturer hits that number. Since this is an "energy program" I would hope that the Department of Energy posts the details for each manufacturer's qualifications on their website.

 

Since the 60K is such an important trigger number for each manufacturer, I'm sure it will be well-known when each manufacturer hits that number. Since this is an "energy program" I would hope that the Department of Energy posts the details for each manufacturer's qualifications on their website.

 

Yes, it's fine for when THEY hit it, but what about when YOU hit it?

I guess the quarter thing would tell us the taxpayer. Toyota hits 60K in April, you have to buy the car by December (or is it September?)

 

Maybe not - because of the weight class it's possible that the Insight MT may not get a deduction, while the Prius actually gets the highest credit. Here's a chart from Hybrid Center of the Union of Concerned Scientists showing their calculations. This is the most optimistic I've seen for the Prius, other calculations put it closer to $2,700. I think we'll need to wait for the manufacturer's to do the math and then get Federal approval.

HEV Model Emissions Rating Tax Credit
2005 Toyota Prius Bin 3 $3,150
2005 Honda Insight (automatic) Bin 5 $1,450
2005 Honda Insight (manual) Bin 9 $0
2005 Honda Civic Hybrid (automatic) Bin 2 $1,700
2005 Honda Civic Hybrid (manual 5-speed) Bin 2 $1,700
2005 Honda Civic Hybrid (lean burn, automatic) Bin 9 $0
2005 Honda Civic Hybrid (lean burn, manual 5-speed) Bin 9 $0
2005 Honda Accord Hybrid Bin 5 $650
2005 Ford Escape Hybrid (front wheel drive) Bin 4 $2,600
2005 Ford Escape Hybrid (four wheel drive) Bin 4 $1,950
2006 Mercury Mariner Hybrid (four wheel drive) Bin 5 $1,950
2006 Toyota Highlander Hybrid (front wheel drive) Bin 3 $1,950
2006 Toyota Highlander Hybrid (four wheel drive) Bin 3 $2,200
2006 Lexus RX-400h (four wheel drive) Bin 3 $2,200


Link to article: http://www.ucsusa.org/hybridcenter/incentives.cfm

Somewhat disappointing that the reward is best in class instead of best overall. A $2,200 credit for a Lexus and nothing for an Insight MT getting about twice the fuel efficiency is wrong.

Cheers,
Jeff

 

But this proves what we have said about social engineering to achieve a result. To get us to buy and use more efficient cars/suvs, it is better to get a 5-6 passenger suv clean and economical than it is to have those same 5-6 people driving 3 Insights.

Another thought: How many of these 60mpg vehicles can tow anything? How many people will tow their boat with an suv? If all of those used ATPZEV suvs vice those that pollute.

Guvmint...........

 

If Toyota hits 60K hybrid units in April 2006, the full tax credit would be applicable to to purchases throught September 2006.

As I said, since the 60K trigger for the tax credit phase out is a very important provision to knowing what level of tax credit an individual will qualify for, it will be well-known information when the time comes.