Capital Commerce: Tax credit for hybrids: the great unknown
If one of your New Year's resolutions is to buy a hybrid car, you'll have to walk through dealer showrooms in the dark about what tax breaks to expect. A law establishing a new set of tax credits for hybrids went into effect on January 1–but the Internal Revenue Service has not yet issued the specific rules that stipulate what the tax credit will be for each vehicle.
"We have attorneys working on it, and we're trying to get it out as quickly as possible," says IRS spokeswoman Nancy Mathis. She adds that consumers won't need to know the exact value of the credit until they file their 2006 taxes next year. But hybrid advocates are concerned, because consumers won't be able to comparison shop as easily as they would if they knew the exact tax savings.
Under the complex system Congress dreamed up in the law, each car will carry a different tax credit, depending on its fuel economy, weight, and tailpipe pollution. So shoppers today won't know if they can count on a tax credit of $3,150 (one estimate for buying a Toyota Prius) or a mere $250 tax benefit (the estimate for buying a Chevrolet Silverado). "To be fair, the law is very complicated," says Kateri Callahan, executive director of the Alliance to Save Energy, which promotes fuel efficiency. "However, it is the IRS's obligation to issue guidelines and give direction immediately."
For now, the best information available is an estimate of the possible tax credits, developed by the American Council for an Energy Efficient Economy and available under "passenger cars" at this website: www.energytaxincentives.org
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