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Beginning in 2006, men and women getting hybrid automobiles will get a tax credit instead of a tax deduction. The IRS has just began to kick out the precise amounts you can claim for your new hybrid.
Numerous Ford and Mercury Hybrids Get Tax Credit Certification From IRS
Beneath the Energy Policy Act of 2005, the tax advantages of owning a hybrid car underwent substantial changes. Whereas you could previously claim a tax deduction, the new law converted the deduction into a tax credit. Tax credits are FAR a lot more beneficial than deductions, due to the fact they lessen the quantity of tax you owe on a dollar for dollar basis. Tax Deductions, on the other hand, merely decrease your adjusted gross income prior to determining the amount of tax you owe pursuant to the tax tables. In laymens terms, this conversion is a extremely good thing.
Not every single hybrid auto qualifies for a tax credit. The Internal Revenue Service must very first evaluate it and then problem guidance on which cars qualify and the size of the credit you can claim for each. The maximum the IRS can designate per auto is $3,400. Right here are the numbers it recently kicked out for different Ford and Mercury hybrid models.
2006 Ford Escape Hybrid Front WD: $2,600
2006 Ford Escape Hybrid 4 WD: $1,950
2006 Mercury Mariner Hybrid four WD: $1,950
If you purchased your hybrid vehicle prior to 2006, you are restricted to claiming a tax deduction in the amount previously designated by the IRS, normally $two,000. If you waited until 2006, you can claim the above amounts with a couple of hitches. 1st, the quantity only applies to the very first 60,000 automobiles sold for each model. If you buy a hybrid in the 60,0001 to 120,000 sales range, you can claim only half of the tax credit. Sales 120,001 via 180,000 can claim on a quarter of the amount designated above. Specifically how you are supposed to know the sales figures is a bit murky, but Ford and Mercury will undoubtedly take steps to make it clear.
Hybrid cars make sense from an environmental aspect. Throw in important financial savings on gas fees and a big tax credit, and they should fly off the lots. california fords california ford ford dealer los angeles
