Environmental Tax Breaks Updated

Posted on 28. Apr, 2006 by in Saving & Investing

A recent tax law change, the Energy Policy Act of 2005, states that during 2006, individuals can make energy-conscious purchases that will provide tax benefits when filling out their tax returns next year. The new law provides tax credits for making your principal residence, which must be in the United States, more energy efficient and for buying certain energy efficient items. At the same time the law provides credits for various types of alternative motor vehicles, including hybrids.
The most significant change in the tax law is that the previous deduction was changed into a tax credit. The tax credit goes toward your final tax bill dollar for dollar (this is better for you).

The tax credit for hybrid vehicles, which was enacted by the Energy Policy Act of 2005, may be as much as $3,400 for those who purchase the most fuel-efficient passenger automobiles and light trucks. The list of cars available for the tax deduction is growing each month, but here are the winners so far:

  • Toyota Prius (05, 06) – $3150
  • Toyota Highlander Hybrid (06) – $2600 (2WD & 4WD)
  • Lexus RX400h (06) – $2200 (2WD & 4WD)
  • Toyota Camry Hybrid (07) – $2600
  • Lexus GS 450h (07) – $1550
  • Ford Escape Hybrid, Mercury Mariner Hybrid – $1950 4WD
  • Ford Escape Hybrid FWD – $2600

Since taxpayers may claim the full amount of the allowable credit only up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th hybrid and/or advanced lean-burn technology motor vehicle, consumers seeking the credit may want to buy early in the year. After the first quarter the available credit is phased out.

For more details on the new energy policy tax breaks check out the IRS’s highlights.

One Response to “Environmental Tax Breaks Updated”

  1. jim

    28. Apr, 2006

    nice list

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