Hybrid Tax Credit, Incentive, and
Rebate Systems

The hybrid tax credit and other incentives and rebates for a hybrid car and other high mileage cars could offset the additional cost to purchase the new vehicle.

We say this because, many people cite cost as they're number 1 reason for not purchasing a hybrid car or alternative fuel vehicle. But there are hybrid tax credits in place by the federal and state governments, as well as other incentive programs and rebates that are worth considering if you'd like to purchase a high mileage car.

Thanks to the Energy Policy Act of 2005, qualified hybrid cars and other fuel efficient vehicles qualify for federal tax credits.


In order to qualify, the vehicle must:

• be purchased / placed in service between Jan. 1, 2006 and Dec. 31, 2010,
• be brand new with the first owner (used vehicles do not qualify).

In addition to hybrid cars, tax credits are also offered for:

• Fuel Cells
• Alternative Fuel Vehicles
• Advanced Lean Burn Technology Vehicles

Unfortunately, 2009-2010 Toyota, Honda and Lexus hybrid cars do not qualify. If you purchased a 2005-2008, however, and the vehicle was brand new, you could qualify for a tax credit of up to $3,150, if you haven't already claimed it. See your tax professional or contact the IRS for more details.

As stated above, hybrid cars aren't the only vehicles that qualify for these tax credits. Currently, certain 2009 diesel cars made by Audi, BMW, Mercedes, and Volkswagen qualify for a tax credit between $900-$1800.

Other alternative fuel vehicles can earn you a $4,000 tax credit!

"What About Other Incentives and
Rebates for My Hybrid Car?"

If you own or purchase a hybrid car, alternative fuel vehicle or other fuel efficient vehicle, you could qualify for:

• use of carpool lanes, even when you aren't carpooling,
• free parking at metered spaces,
• state tax credits,
• tax rebates,
• emissions testing exemptions,
• sales tax exemptions and credits,
• use of clean fuel lanes,
• excise tax exemptions,
• reduced car registration charges,
• private rebate programs, and/or
• tax reimbursments.

Want to know if your region offers one of the above programs?


So, while the cost of a hybrid car or another alternative fuel vehicle is more expensive than regular cars, the incentives, rebates, and tax credits (like the federal hybrid tax credit), could save you a ton of time, money and hassle, not just on fuel costs, but also with various state and federal taxes and parking fees. With the use of a carpool lane even when you aren't carpooling, think of how late you could sleep in and still make it to work on time!

So if you're toying with the idea of purchasing a hybrid car or other fuel efficient vehicle, check the facts and do the math. A hybrid car could be more in your price range than you realize!

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