Hybrid Car and Electric Car Tax Credits
If you are planning on buying a new energy-efficient car in 2011, there is good news and bad news.
The bad news is that the tax credits for the popular hybrid gas-electric cars expired at the end of 2010. But the good news is that there is now a tax credit for plug-in electric hybrids and for fully electric cars, and the credit is worth up to $7,500. The Alternative Motor Vehicle Tax Credit only applies to new, not used, cars.
2011 Alternative Motor Vehicle Credit for Electric Cars
The only plug-in hybrid car that currently qualifies for the credit is the Chevrolet Volt.
The fully electric cars that currently qualify include: the CODA Sedan, the Nissan Leaf, the smart fortwo, the Tesla Roadster, and the Wheego LiFe.
The 2011 Alternative Motor Vehicle Tax Credit is currently worth $7,500 for any of the qualifying models. The credit will decrease in value (initially by 50%) and begin to phase out for the qualifying cars of each manufacturer after 200,000 of its qualifying models are produced.
More green tax savings: find out how to get a tax credit for energy-efficient improvements to your home.
2010 Alternative Motor Vehicle Credit for Hybrid Cars
You may be eligible for a hybrid vehicle tax credit (an energy efficient car tax credit) if you bought a hybrid or other alternative fuel car or light truck in 2010, as long the gross weight rating of the vehicle is 8,500 pounds or less. The vehicle must have been purchased no later than December 31, 2010. For the most fuel-efficient models, the Alternative Motor Vehicle Credit can be worth up to $3,000. The exact amount of the credit depends upon the make and model of the vehicle you purchased.
To qualify as a hybrid vehicle, your car or light truck must have drive trains powered by both an internal combustion engine and a rechargeable battery. Most hybrid makes and models (over 40 models overall) do qualify for this credit. To determine if your vehicle qualifies for the credit, and the amount of the credit, check the lists of vehicles on the IRS website:
Taxpayers may claim the credit on their 2010 Tax Returns or 2010 Amended Returns if they bought a qualified hybrid or alternative fuel vehicle in 2010. The credit is only available to the original purchaser of the vehicle and cannot be claimed by an individual who leased it or bought it used.
The credit has been phased out for some older hybrid vehicle models but is available for several new hybrid cars. After 60,000 hybrid vehicles are sold by a particular manufacturer, the tax credit is reduced and gradually eliminated. To claim the full credit, one must file by the end of the third month after the quarter in which the manufacturer sells its 60,000th hybrid vehicle.
More details can be found in the instructions for Form 8910, Alternative Motor Vehicle Credit.
See what other tax credits and tax deductions you may qualify for.