Home Page About Us Contribute
LuckyBug LifeStyle
















Tax Deductions for Your 2005 Hybrid Automobile

American Government Special Collections Reference Desk

Tax Deductions for Your 2005 Hybrid Automobile

Richard Chapo
March 23, 2006

With the recent push by President Bush for alternative fuel strategies, much confusion has arisen regarding tax incentives for hybrid vehicles. This article clarifies the issue for you.

Tax Deductions for Your 2005 Hybrid Automobile

People buy hybrid vehicles for different reason. They are good for the environment. They get much better mileage, which saves money. There are tax incentives for buying them. With the recent energy plan put in place by the federal government, there is a lot of confusion regarding the tax incentives.

Specifically, the question for most people is whether they can claim a tax deduction or a tax credit when they buy a hybrid. Here is the breakdown:

The Good – If you purchased a hybrid vehicle in 2005, you can claim a tax deduction.

The Bad – If you purchased a hybrid vehicle in 2005, you cannot claim a tax credit.

The Ugly – If you had waited till 2006, you could have claimed a tax credit.

Tax credits save you a lot more money than tax deductions. Tax deductions are applied to your gross income like any other deduction. This helps lower your tax bill, but tax credits are much more powerful. Tax credits are not taken out of your gross income. Instead, tax credits are taken out of the exact amount of tax you owe the government. If you owe the government $10,000 after filling out your tax return and can claim a $2,000 tax credit, your final tax bill is $8,000.

You are stuck with a tax deduction tax deduction if you purchased a hybrid in 2005, but at least it is a nice one. The deduction amount is $2,000 for vehicles certified by the IRS. They include:

Ford Escape Hybrid: Model Year 2006

Mercury Mariner Hybrid: Model Year 2006

Lexus RX 400h: Model Year 2006

Ford Escape Hybrid: Model Year 2005

Toyota Prius: Model Years 2001 through 2006

Toyota Highlander Hybrid: Model Year 2006

Honda Insight: Model Years 2000 through 2005

Honda Civic Hybrid: Model Years 2003 and 2005

Honda Accord Hybrid: Model Year 2005

To claim this deduction, you must have purchased a NEW hybrid. If the hybrid was used, you get nothing. Assuming it was new, the deduction is claimed on line 36 of the 1040 form. Make sure to write Clean Fuel in the space provided.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on tax and taxes. Visit us to read more tax articles and our new tax credits page.



Connect with The Crittenden Automotive Library

The Crittenden Automotive Library at Google+ The Crittenden Automotive Library on Facebook The Crittenden Automotive Library on Instagram The Crittenden Automotive Library at The Internet Archive The Crittenden Automotive Library on Pinterest The Crittenden Automotive Library on Twitter The Crittenden Automotive Library on Tumblr  
 
 


The Crittenden Automotive Library

Home Page    About Us    Contribute




By accessing the The Crittenden Automotive Library/CarsAndRacingStuff.com, you signify your agreement with the terms and conditions on our Legal Information:  Disclaimers & Privacy Policy page.

To notify The Crittenden Automotive Library of errors, suggest topics, contribute information, make a comment on a page or to ask a question e-mail us.