Hybrid Cars Drive Tax Savings

Thinking of buying a hybrid car? Doing so will save the environment and keep money in your wallet. You could be eligible for a tax credit of up to $3,000 depending on when the car is purchased and the model you buy.

The Alternative Motor Vehicle Credit applies to cars purchased after Jan. 1, 2006. Currently, there are more than 40 different models of hybrid vehicles eligible for the credit. You can see which cars qualify by visiting www.IRS.gov. Once 60,000 hybrid cars from a particular manufacturer are sold, the tax credit is reduced until it’s ultimately phased out.

Keep in mind, though, that the credit is only available to the original buyer of the car. So, if you purchase a used hybrid vehicle, you can’t claim the tax credit. And, if you lease a hybrid car, the credit goes to the company leasing the vehicle.