If you’re considering purchasing a hybrid car, there may be no better time than now. The United States government has had a tax credit in place since 2005 for certain hybrid vehicles. That credit has been extended a couple of times, but is going to be seeing its end on December 31, 2010. Taking advantage of this credit is actually quite a bit more beneficial than just having another deduction on your taxes, as a credit is different than a deduction. A credit will reduce your tax dollar-for-dollar while a deduction simply reduces the percentage of tax owed.

The amount of the credit differs by make and model of car, and some cars which were once eligible no longer are. Each manufacturer was given a certain pre-determined number of vehicles to sell and once that number was hit, the credit for that manufacturer’s vehicles was over. A list of vehicles still available for the credit, and the amount of those credits, can be found here: http://www.edmunds.com/fueleconomy/car-tax-credit.html. According to the Internal Revenue Service, qualifying hybrid vehicles are cars with a gross vehicle weight of no more than 8,500 lbs. and which draw propulsion energy from onboard sources of stored energy, which are an internal combustion engine using consumable fuel and a rechargeable energy storage system. Full-electrics do not fall into this category, however, credits for full electrics may actually run past the December 31st deadline.

Here’s a list of qualifying 2011 hybrid vehicles according to the IRS:

Model Year Make Model Credit Amount
2011 BMW Active Hybrid 750i $900
Active Hybrid Li $900
Active Hybrid X6 $1,550
2011 Cadillac Escalade Hybrid (2WD & 4WD) $2,200
2011 Chevrolet Tahoe Hybrid C1500 2WD $2,200
Tahoe Hybrid K1500 4WD $2,200
Silverado Hybrid C15 2WD $2,200
Silverado Hybrid K15 4WD $2,200
2011 GMC Sierra Hybrid C15 2WD $2,200
Sierra Hybrid K15 4WD $2,200
Yukon Hybrid C1500 2WD $2,200
Yukon Hybrid K1500 4WD $2,200
Yukon Denali Hybrid K1500 4WD $2,200
2011 Mercedes Benz ML450 Hybrid $2,200
2011 Nissan Altima Hybrid $2,350

Here’s the IRS list of the 2010 hybrid vehicles that qualify for tax credit:

Model Year Make Model Credit Amount NOTE:
2010 BMW ActiveHybrid X6 $1,550
2010 Cadillac Escalade Hybrid (2WD & 4WD) $2,200
2010 Chevrolet Malibu Hybrid $1,550
Silverado Hybrid C15 2WD $2,200
Silverado Hybrid K15 4WD $2,200
Tahoe Hybrid C1500 2WD $2,200
Tahoe Hybrid K1500 4WD $2,200
2010 Ford Escape Hybrid 4×2 $3,000 If purchased before 04-01-09: Full Credit Amount
$1,500 If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1500)
$750 If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($750)
Escape Hybrid 4×4 $2,600 If purchased before 04-01-09: Full Credit Amount
$1,300 If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1,300)
$650 If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($650)
Fusion Hybrid $3,400 If purchased before 04-01-09: Full Credit Amount
$1,700 If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1700)
$850 If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($850)
2010 GMC Sierra Hybrid C15 2WD $2,200
Sierra Hybrid K15 4WD $2,200
Yukon Hybrid C1500 2WD $2,200
Yukon Hybrid K1500 4WD $2,200
Yukon Denali Hybrid C1500 2WD $2,200
Yukon Denali Hybrid K 1500 4WD $2,200
2010 Mercury Mariner Hybrid 4×2 $3,000 If purchased before 04-01-09: Full Credit Amount
$1,500 If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1500)
$750 If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($750)
Mariner Hybrid 4×4 $2,600 If purchased before 04-01-09: Full Credit Amount
$1,300 If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1,300)
$650 If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($650)
Milan Hybrid $3,400 If purchased before 04-01-09: Full Credit Amount
$1,700 If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1700)
$850 If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($850)
2010 Mercedes- Benz S 400 Hybrid $1,150
ML 450 Hybrid $2,200
2010 Nissan Altima Hybrid $2,350

There are a few requirements to be met in order to be able to take this credit. First off, the vehicle has to be new, so forget about taking a credit on that great deal your salesman will give you on a lease turn-in. The credit is only available to the original purchaser. In the case of a lease (saying that you are the leaser), the credit goes to the dealership where you purchase the vehicle since they are the ones who will technically still own it. Most dealerships will pass this credit on to their consumers, but you’ll want to check and make sure of that fact before signing any papers.

Second, the credit is a federal tax credit. That means whatever the amount listed for the credit on your vehicle is, that’s the amount you can take from your federal taxes. State tax credits will vary by state. Most states will be offering some type of credit for the purchase, but it will undoubtedly not be matching what you’ll get in federal credit. In states that have no sales tax on vehicles, there will usually be other types of tax credit offered to you. That will also vary by state. The best place to find what your credit will be to check out your state government’s website or your local department of commerce.

Also, if you’re planning on taking the credit and you prepare your own taxes every year, make sure you have Form 8910. This is the form that needs to be filled out for the IRS to make the credit valid. If you have your taxes done for you, it may not be a bad idea to just mention the credit and the form to your accountant. That’s a pretty big chunk of change to miss out on by not being cautious.

Finally, don’t forget to do your homework. Just because a big tax credit is available for a certain vehicle doesn’t always necessarily make that vehicle right for you. Make sure you know everything about what you want from your vehicle before jumping at the extra cash. Don’t forget to check out some of our other articles here on iseecars.com to see which models tested the best before making that trip to the dealer.

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