As gas prices continue to rise, drivers are looking for ways to reduce their fuel
costs. One option is to purchase a hybrid vehicle. If you are looking to buy a new
hybrid, you should consider the tax advantage that is available for several of the
newer hybrid vehicles to hit the market.
A tax credit, called the Alternative Motor Vehicle Credit, applies to certified
hybrids purchased after January 1, 2006. A hybrid vehicle is powered by both an
internal combustion engine and a rechargeable battery. The tax credit varies by the
fuel-efficiency of the model and can be worth as much as $3,000. Credits are available
to the original owner of the vehicle. If you lease a new hybrid, the tax credit would be
available to the leasing company and not the person leasing the vehicle.
The availability of the tax credit for vehicles of a specific manufacturer begins to phase out
when the manufacturer has sold 60,000 hybrid or alternative fuel vehicles. Toyota and Lexus
models are no longer eligible for the tax credit. The Honda models have a partial credit
available for hybrid vehicles sold through December 2008. There are several other manufacturers
that have vehicles eligible for the credit. The IRS website lists the eligible hybrid models
and the available tax credit. Go to www.irs.gov
and search for "Hybrid Cars and Alternative Fuel Vehicles."
The tax credit is claimed on Form 8910, Alternative Motor Vehicle Credit, and then listed on Form
1040, Individual Income Tax Return, as a credit against the tax liability. The credit is not
refundable if it exceeds the tax amount you are required to pay for the year.
If you are looking to buy a new hybrid, consider using a Green Vehicle loan from the Credit Union to
finance your purchase. This special financing option is used for the purchase of hybrid and alternative
fuel vehicles. Hybrids and alternative fuel vehicles are more expensive than normal vehicles and the
Credit Union Green Vehicle loan offsets some of the additional costs of the purchase by offering a
lower interest rate. The Green Vehicle loan has interest rates that are 1% lower than current new
vehicle loan rates. You can check with your local branch or you may contact the Call Center at
1-888-732-8562 for more information.
Tim Jackson is a Certified Public Accountant and a member of the SECU Accounting staff.
The material above is intended to be accurate; however, consultation with appropriate legal
or accounting professionals for assistance is recommended.
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