Hybrid Vehicle Credit Still Available for Some but Probably Not All

Hybrid Vehicle Credit Still Available for Some but Probably Not All

IRS has released three News Releases so far confirming the Hybrid Vehicle Credit is still available for some manufacturers. As of June 30, 2006, sales of qualifying vehicles since January 1, 2006 totaled: Ford/Mercury = 11,885, GM = 1,388, and Honda = 18,496. IRS has not released the sales of Toyota/Lexus vehicles although at the IRS Tax Forums in Chicago in mid-July it was unofficially mentioned Toyota/Lexus had hit the 60,000 mark during the quarter ending June 30, 2006.

There is a limit to the number of vehicles that qualify. Once the sales reach 60,000 vehicles by a particular manufacturer, the limitations kick in for that manufacturer. The credit is still allowed in full for the first quarter after the quarter in which the 60,000th vehicle is sold. The credit is reduced to 50% for the second and third quarters, then to 25% for purchases in the fourth and fifth quarters after the quarter in which the 60,000th vehicle is sold.

Therefore purchasers of Ford/Mercury, GM, and Honda qualifying vehicles will enjoy the full credit at least through December 2006 since these three companies did not hit the maximum prior to June 30.

However, if the Toyota/Lexus sales did indeed hit the 60,000 mark during the quarter ending June 30, 2006, the 100% credit is only available for Toyota/Lexus vehicles purchased and placed in service prior to September 30, 2006. The 50% credit would be applicable for the period from October 1, 2006-March 31, 2007 and the 25% credit would be applicable for the period from April 1, 2007-September 30, 2007. As soon as official information of the Toyota/Lexus sales is released, we will notify all of such.

A copy of the latest IRS Newswire can be found at by clicking on irs-news, and then on the applicable News Release number of IR-2006-122, IR-2006-125, and IR-2006-126.

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This text has been shared with you courtesy of: David & Mary Mellem, EAs & Ashwaubenon Tax Professionals, 920-496-1065 (fax 920-496-9111) , , , and .

©2006 Ashwaubenon Tax Professionals. No reproduction of this article is permitted without the express consent of Ashwaubenon Tax Professionals, 2140 Holmgren Way, Suite 1040, Green Bay, WI54304.

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