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...