Treasury Secretary Announces Tax Break on Hybrid Cars

Many will benefit from U.S. Treasury Secretary John Snow’s recent announcement of up to $3,400 in tax credit for those who purchase the most fuel-efficient vehicles. Most currently available hybrid vehicles qualify for the tax credit, which was enacted by the Energy Policy Act of 2005, and which includes advanced lean-burn technology vehicles as well.

“The development and use of hybrid vehicles is a key step toward reducing gasoline consumption, emissions of air pollutants and greenhouse gas emissions,” said Snow. “I commend the manufacturers who are making these energy-efficient and environment-friendly vehicles and hope that the President’s energy bill proves to be an important step in their rising prominence on American roads.” While hybrid vehicles are described to have drive trains powered by both an internal combustion engine and a rechargeable battery, the issuance seeks to dispel all doubt and rumor for buyers, sellers, manufacturers and accountants. “This IRS guidance establishes a process that manufacturers can use to certify the amount of credit the purchaser of the vehicle can claim. This is going to provide much-needed certainty to Americans who are purchasing these vehicles. It means they will be able to rely on the manufacturer’s certification when they claim the credit on their tax return. This is good news for those consumers because they are also taxpayers who seek simpler, fairer tax filing, and it is good news for manufacturers who can now offer reassurance to customers on the ease of the tax rules,” Snow said. The Energy Policy Act also provides tax credits for other eligible motor vehicles not covered by today’s guidance, including fuel-cell vehicles, alternative fuel vehicles, and hybrid heavy trucks. The IRS will issue guidance providing certification procedures for these vehicles in the near future.

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