Home Page About Us Contribute
LuckyBug LifeStyle
















Various Ford and Mercury Hybrids Get Tax Credit Certification From IRS

American Government Special Collections Reference Desk

Topics:  Ford, Mercury

Various Ford and Mercury Hybrids Get Tax Credit Certification From IRS

Richard Chapo
April 19, 2006

Starting in 2006, individuals buying hybrid cars will get a tax credit instead of a tax deduction. The IRS has just started to kick out the exact amounts you can claim for your new hybrid.

Various Ford and Mercury Hybrids Get Tax Credit Certification From IRS

Under the Energy Policy Act of 2005, the tax benefits of owning a hybrid vehicle underwent significant changes. Whereas you could previously claim a tax deduction, the new law converted the deduction into a tax credit. Tax credits are FAR more valuable than deductions, because they reduce the amount of tax you owe on a dollar for dollar basis. Tax Deductions, on the other hand, merely reduce your adjusted gross income prior to determining the amount of tax you owe pursuant to the tax tables. In laymen’s terms, this conversion is a very good thing.

Not every hybrid car qualifies for a tax credit. The Internal Revenue Service must first evaluate it and then issue guidance on which cars qualify and the size of the credit you can claim for each. The maximum the IRS can designate per car is $3,400. Here are the numbers it recently kicked out for various Ford and Mercury hybrid models.

2006 Ford Escape Hybrid Front WD: $2,600

2006 Ford Escape Hybrid 4 WD: $1,950

2006 Mercury Mariner Hybrid 4 WD: $1,950

If you purchased your hybrid car prior to 2006, you are restricted to claiming a tax deduction in the amount previously designated by the IRS, usually $2,000. If you waited until 2006, you can claim the above amounts with a few hitches. First, the amount only applies to the first 60,000 cars sold for each model. If you purchase a hybrid in the 60,0001 to 120,000 sales range, you can claim only half of the tax credit. Sales 120,001 through 180,000 can claim on a quarter of the amount designated above. Exactly how you are supposed to know the sales figures is a bit murky, but Ford and Mercury will undoubtedly take steps to make it clear.

Hybrid vehicles make sense from an environmental aspect. Throw in significant savings on gas costs and a large tax credit, and they should fly off the lots.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on taxes. Visit us to read more articles about tax deductions 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.