With the expiration of federal incentives to purchase a hybrid or alternative fuel vehicle coming at the beginning of the 2011 year, now may be the only time Arizona residents are going to see some initiative to purchase one of these clean-driving machines. Federal tax incentives will be coming to a halt on December 31, 2010, and it doesn’t appear that state incentives in Arizona are going to be a very rewarding bargain. That’s because currently, there really are none.

There have been a couple of bills which would have made nice incentives for Arizona residents to purchase alternative fuel vehicles, had they passed. For one, House Bill 2228, which was introduced in January of 2007, would have made hybrid-motor vehicles eligible for the same reduced vehicle license tax as all other alternative fuel vehicles. That reduced tax would have been one percent of the vehicle’s MSRP for the first twelve months, with the MSRP dropping by 15% every year after the first year. Unfortunately, that provision was removed before the bill’s final passage in February of the same year.

Then there was SB 1466. This was a bill which would have reduced the annual vehicle license tax by a certain amount based on the vehicle’s fuel efficiency. Increments began at a 25% reduction in the tax for vehicles which had an estimated mpg rating of more than 31 mpg but less than 36. It capped out at a set price of $10 for vehicles rated at 46 mpg or greater. However, after passing through the Arizona Transportation Committee, the bill failed to pass the state legislature.

But don’t lose faith just yet Arizona, there may be hope on the horizon. Currently there are 10,000 hybrid vehicles enjoying the luxury of using the High-Occupancy Vehicle (HOV) lane, no matter how many occupants the vehicle has. Just after the hybrid tax credit section of HB 2228 was removed, Governor Napolitano issued Executive Order 2006-13. This order states that all model years of the Honda Insight, Honda Civic Hybrid, and Toyota Prius, may participate in the Energy Efficiency Plate program. These plates make it possible to utilize the HOV lane with any number of occupants in the vehicle.

Unfortunately, there is a drawback to this one incentive being offered by the Sun Devil State. The 10,000-plate limit was already reached. This prompted even further legislation. In July of 2009, SB 1320-491R was signed by the governor and placed into effect. This eliminates hybrid owners from being able to purchase the Alternative Fuel Vehicle license plates. Instead, it creates a new category for hybrid owners – the Low Emissions and Energy Efficient Vehicles (LEEV) plates. These plates are available to any hybrid owner whose vehicle achieves no less than a 50% increase in city fuel economy or no less than a 25% increase in combined city-highway fuel economy and meets the federal Tier II emissions level standards.

This program is also available on a first-come, first-serve basis, and is available to the first 10,000 applicants. At the current time, that number has been reached and no further plates are being assigned until the state can assess the impact of low-occupancy vehicles travelling in the high-occupancy lane. That doesn’t mean the program is dead. It simply means the state needs to make sure things are still running smoothly and the program is not adversely affecting HOV drivers.

For more information on the program, you can visit the Arizona Department of Transportation website at: www.azdot.gov, or you can find out if any of the 10,000 available plates have opened up by visiting www.servicearizona.com or calling (602) 255-0072. For now though, it looks like the federal benefits are your best bet at seeing some extra incentive for buying a hybrid in Arizona.

Be sure to also see if the vehicles you’re considering can qualify for a federal tax credit, deduction, or rebate.  Here’s  more info on new car tax credit, hybrid car tax credit, new diesel car tax credit, and electric car tax credit from the federal government.  Also, make sure to check out the list of year-end new car deals, new car lease deals, and certified used car deals being offered by the car makers.  Given the year-end and car manufacturers’ desire to sell more cars, there’s great deals to be had if you do your homework and are aware of all the incentives, discounts, rebates you can qualify for.  Here’s some tips on year-end car buying strategy.

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