Last Friday, the Internal Revenue Service (IRS) announced tax credit amounts for certain hybrid vehicles manufactured by Ford, Mercury, Toyota and Lexus. Starting in 2006, these tax credits replace the tax deduction of $2,000 which was previously allowed for taxpayers who purchased a new hybrid vehicle before December 31, 2005, for the clean-burning fuel deduction.
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Many of the hybrid vehicles currently available may qualify for this new tax credit, however, the vehicle certifications recently acknowledged by the IRS and their credit amounts are:
- 2006 Ford Escape Hybrid Front WD $2,600
- 2006 Ford Escape Hybrid 4 WD $1,950
- 2006 Mercury Mariner Hybrid 4 WD $1,950
- 2005 Toyota Prius $3,150
- 2006 Toyota Prius $3,150
- 2006 Toyota Highlander 4WD Hybrid $2,600
- 2006 Toyota Highlander 2 WD Hybrid $2,600
- 2006 Lexus RX400h 2WD $2,200
- 2006 Lexus RX400h 4WD $2,200
Consumers considering purchasing one of these hybrid vehicles may want to buy early, as the full credit is only available for a limited time. Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th vehicle. For the second and third quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.