Some Hybrid Credits are About to Expire
USA Today writes about the fact that tax credits on hybrid cars, one of the big selling points for purchasing the vehicles, are not as cut-and-dry as what you may hear at the dealership. In fact, the tax credit will begin to lower once the manufacturer sells 60,000 vehicles.
“Once a manufacturer’s sales hit the limit, buyers are eligible for the full credit until the end of the quarter in which the threshold was reached and through the next quarter. Then they’re eligible for half the credit for six months. For the next six months, the credit will shrink to 25% of the full amount, then it will disappear.”
Already the Toyota Prius has hit the 60,000 car mark, and the Honda Civic hybrid is expected to reach the mark this year. While new hybrid models are being developed each year, the tax credit for all hybrids is set to expire in 2010.
The good news is that the premium for hybrid cars over non-hybrids is lowering, and the primary function of the tax break was to help cover this premium. This could also help explain why demand for used hybrids has lowered, as these buyers aren’t able to take advantage of the tax break.
