New tax credits for hybrids

The tax credits for buying the hybrid cars expired on December 31 2010. A law was passed by the president George Bush to grant the tax credit of up to $ 3,400 for the most efficient hybrid cars. Buying of the compressed natural vehicles gave a tax credit of $ 4,000 to the purchasers. After the expiration of this tax credits, the congress did not extend them.

As most of the people do not know much about the new technologies, the government proposed a new tax credits on new car technology.

Nowadays the legislature is planning to promote new tax credits plug-in hybrid cars and the electric cars. The tax credits on hybrid cars are replaced by the local and national credits in the federal tax credit plus state-based incentives. ForCalifornia, the state based incentives go up to a maximum of $5,000. The federal tax credit’s size is dependent on the size of the car’s battery. For example, as the Toyota Prius has a smaller battery it gives only a tax credit of $2,500 whereas the Nissan Leaf having a large electric battery gives a tax credit of $7,500.

Individuals who convert their car into a plug-in hybrid or into an electric vehicle will receive a tax credit equal to 10 percent of the conversion cost. For example if the conversion cost is $50,000, then $5,000 would be given. These tax credits are clearly explained by IRS sections 1141, 1142 and 1143 of the American Recovery and Reinvestment Act.

There is also a reduction of sales tax on buying of eligible electric or plug-in cars. You will be getting a discount of 7% on the cost of the car. If you are planning to buy a hybrid car on loan, then the discount on the selling price of the hybrid car may help you. You can get the chart if the local car credits in the website http://www.pluginamerica.org/incentives.

As the hybrid cars are lesser than three percent of new cars on the road, most of the advocates are thinking that the hybrid tax credits vanished very quickly. In a recent interview, the President and CEO of the Association of International Automobile Manufacturers Mike Stanton talked about the tax credits. They said “The intent was to provide an incentive for new technology. Hybrid technology is now pretty well-known.”

If the tax credits are vanishing on the hybrid cars, then most of the people will lose interest in buying the hybrid cars.