If you’ve been considering buying a hybrid vehicle, a tax credit may help lure you into the showroom. The actual credit varies by vehicle, and the most-popular hybrids—made by Lexus, Honda and Toyota—have already exhausted their available credits.
But if you purchase a Ford Fusion or Mercury Milan hybrid by December 31, you will be eligible for a tax credit of $850. (A tax credit, which reduces your tax bill dollar for dollar, is more valuable than a tax deduction, which merely reduces the amount of your income that is taxed.) If you purchase one of these models between April 1 and September 30, 2009, you’ll qualify for a $1,700 tax credit, and if you bought one of these hybrids during the first quarter of 2009, you can claim the full tax credit, of $3,400, on your 2009 tax return.
The credit is phased out once a manufacturer sells 60,000 hybrid vehicles. Lexus, Toyota and Honda all hit this mark in previous years, so you won’t get a tax credit if you buy one of their hybrids this year. Ford and Mercury hit the 60,000 mark in the last quarter of 2008. That means you will be allowed to claim only 50% of the credit for purchases of their hybrid vehicles in April through September 2009 and 25% of the credit for purchases made in the last quarter of the year.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Full tax credits are still in effect for 2010 hybrid versions of the Nissan Altima ($2,340) and Chevrolet Malibu ($1,550). The full $2,200 credit is available for each of the following 2010 hybrid models: Cadillac Escalade; Chevrolet Silverado and Tahoe; and GMC Sierra and Yukon.
There is no income eligibility limit for claiming the credit, and you can use it even if you are subject to the alternative minimum tax, which normally disallows many credits and deductions permitted under the regular tax rules.
-
AI vs the Stock Market: How Did Alphabet, Nike and Industrial Stocks Perform in June?AI is a new tool to help investors analyze data, but can it beat the stock market? Here's how a chatbot's stock picks fared in June.
-
Stock Market Today: A Historic Quarter Closes on High Notes"All's well that ends well" is one way to describe the second quarter of 2025, at least from a pure price-action perspective.
-
2025 SALT Cap Could Hurt Top 'Hidden Home Cost'Tax Deductions The latest GOP tax bill might make hidden homeowner costs worse for you. Here’s how.
-
Retire in the Bahamas With These Three Tax BenefitsRetirement Taxes Retirement in the Bahamas may be worth considering for high-net-worth individuals who hate paying taxes on income and capital gains.
-
2025 Virginia Tax Rebate Checks Coming Soon? What to Know NowTax Rebates Given a historic 2025 gubernatorial race, tax policy will remain a key issue for Virginians in the months ahead.
-
Summer Backyard Ideas With Added Tax Benefits for 2025Tax Tips Find out how these summer 2025 home projects can help you save on taxes next year.
-
Coverdell ESAs vs. 529 Plans: Which Should You Choose?Savings Accounts These savings accounts can offer tax benefits for school and retirement expenses. Here’s how.
-
Homeschoolers Could Soon Save on Expenses With 529 PlansSavings Accounts A new House GOP bill could change how you save for your child's homeschool education. Find out how.
-
Five ‘Big Beautiful Bill’ Tax Changes to Watch in the SenateTax Policy The House passed its version of Trump’s "One Big, Beautiful Bill." Here’s what to look for as Senate Republicans take up the mega legislation.
-
New GOP Car Loan Tax Deduction: Which Vehicles and Buyers QualifyTax Breaks To fulfill Trump's campaign promise, GOP lawmakers want to offer a tax deduction for car loan interest. How would it work?
