By Joe Benton
ConsumerAffairs.com
February 28, 2008
The Internal Revenue Service is cutting the tax credit available to consumers who buy a new Honda hybrid.
After reviewing the fourth quarter 2007 sales of American Honda Motor Company, the IRS said that purchasers of qualifying Honda vehicles may continue to claim just 50 percent of the credit for hybrids bought between January 1 and June 30, 2008.
The credit is cut in half on July 1 and disappears altogether on January 1, 2009.
Honda sold 8,017 qualifying vehicles to retail dealers in the quarter ending December 31, 2007 bringing the cumulative sales of qualified Honda hybrid vehicles sold from January 1, 2006 to December 31, 2007 to 73,108 vehicles.
Taxpayers may claim the full amount of the credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of 60,000 qualified vehicles, according to the IRS.
For the second and third calendar quarters after the quarter in which 60,000 vehicles are sold, taxpayers may claim 50 percent of the credit, the IRS reports. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.
That means consumer who bought a 2007 Accord Hybrid AT before the end of 2007 receive a $1,300 tax credit. Purchases of the same hybrid between January 1 and June 30, 2008 carry a $650 credit.
Honda hybrids buyers receive only a $325 tax credit for a car bought after July 1 until December 31, 2008. No tax credit will be available after the end of the year unless Congress revises the law providing the tax incentives.
The tax credit available for a 2007 Honda Civic Hybrid and the 2008 Honda CVT was $2,100 until the end of 2007. The tax credit dropped to $1,050 January 1, declines to $525 July 1 and goes away December 31.
The IRS gave the same dreary tax credit news to Toyota Prius buyers in May 2007. Tax credits are no longer available for buyers of the popular hybrid.
Tax credits are still available for the GMC Sierra hybrid truck and Chevrolet Silverado hybrid. The truck carry a tax credit of $250 for two wheel drive models and $650 for four wheel drive models.
The Saturn Vue Green Line has a $650 credit and the Aura Hybrid carries a $1,300 credit.
Tax credits are also available for Nissan hybrids. The allowable credit amount for the 2007 Altima Hybrid which is Nissans only certified hybrid vehicle is $2,350.
Consumers seeking the credit may want to buy early because the full credit will only available for a limited time. Credits are also available for several Ford Motor Company vehicles:
• Ford Escape Hybrid 2WD ($2,600)
• Ford Escape Hybrid 4WD ($1,950)
• Mercury Mariner 4WD Hybrid ($1,950)
