Hybrid Credit Amounts Issued

The IRS has certified several cars for the new Federal Hybrid Credit. In previous years, a deduction was allowed up to $2,000 for purchasing a hybrid car. The credit is much better as it is a dollar-for-dollar reduction of tax. For instance, a $2,000 deduction is worth $500 if you are in the 25% tax bracket. On the other hand, a $2,000 credit is worth $2,000 no matter which bracket you are in.

The certification amounts:

• 2006 Ford Escape Hybrid Front WD $2,600
• 2006 Ford Escape Hybrid 4 WD $1,950
• 2006 Mercury Mariner Hybrid 4 WD $1,950

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• 2005 Toyota Prius $3150
• 2006 Toyota Prius $3150
• 2006 Toyota Highlander 4WD Hybrid $2600
• 2006 Toyota Highlander 2WD Hybrid $2600
• 2006 Lexus RX400h 2WD $2200
• 2006 Lexus RX400h 4WD $2200

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The IRS also reminds taxpayers of the details of the program.

Starting in 2006, this tax credit replaces the tax deduction of $2,000 which was previously allowed for taxpayers who purchased a new hybrid vehicle before December 31, 2005 for the clean-burning fuel deduction. The tax credit requires a different certification. Many currently available hybrid vehicles may qualify for this new tax credit.

Consumers seeking the credit may want to buy early since the full credit is only available for a limited time. Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.

So, if you're thinking of buying a hybrid, now you'll know the amount of tax credit you'll get back.