New Hybrid Cars - Tax Information You Need To Know

If you're considering buying a hybrid car or truck, you'll be happy to know that the U.S. government offers certain tax incentives for your purchase. The Energy Policy Act provides a tax credit for those who purchase certain energy efficient vehicles. Since that act passed, it's been up to auto manufacturers to certify to the Internal Revenue Service that certain passenger autos and light trucks qualify for the credit and the amount of the credit. All the consumer needs to do is check with their dealer. If the vehicle qualifies, the amount will be posted at the dealership, usually right on the vehicle itself.

As a buyer, you'll need to meet certain requirements in order to declare a tax credit on your return. The requirements are basic and straightforward. Here they are for your reference:

1. The vehicle must be placed in service after 12-31-05 and purchased on or before 12-31-10, and the original use of the vehicle must begin with the taxpayer claiming the credit.

2. The credit may only be claimed by the original owner of a new, qualifying hybrid vehicle. Used vehicles do not apply.

3. The vehicle must be acquired for use or lease by the taxpayer claiming the credit. You can't buy the car for someone else's use and claim the credit yourself.

4. The credit is only available to the original buyer. Leases don't count as buying. In a lease situation, the leasing company can claim the credit.

5. The vehicle must be used predominantly within the U.S.