If you’ve been considering buying a hybrid vehicle, a tax credit may help lure you into the showroom. The actual credit varies by vehicle, and the most-popular hybrids—made by Lexus, Honda and Toyota—have already exhausted their available credits.
But if you purchase a Ford Fusion or Mercury Milan hybrid by December 31, you will be eligible for a tax credit of $850. (A tax credit, which reduces your tax bill dollar for dollar, is more valuable than a tax deduction, which merely reduces the amount of your income that is taxed.) If you purchase one of these models between April 1 and September 30, 2009, you’ll qualify for a $1,700 tax credit, and if you bought one of these hybrids during the first quarter of 2009, you can claim the full tax credit, of $3,400, on your 2009 tax return.
The credit is phased out once a manufacturer sells 60,000 hybrid vehicles. Lexus, Toyota and Honda all hit this mark in previous years, so you won’t get a tax credit if you buy one of their hybrids this year. Ford and Mercury hit the 60,000 mark in the last quarter of 2008. That means you will be allowed to claim only 50% of the credit for purchases of their hybrid vehicles in April through September 2009 and 25% of the credit for purchases made in the last quarter of the year.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Full tax credits are still in effect for 2010 hybrid versions of the Nissan Altima ($2,340) and Chevrolet Malibu ($1,550). The full $2,200 credit is available for each of the following 2010 hybrid models: Cadillac Escalade; Chevrolet Silverado and Tahoe; and GMC Sierra and Yukon.
There is no income eligibility limit for claiming the credit, and you can use it even if you are subject to the alternative minimum tax, which normally disallows many credits and deductions permitted under the regular tax rules.
-
April RMD? Five Tax Strategies to Manage Your 2025 IncomeTaxable Income The April 1, 2025, deadline for required minimum distributions (RMDs) is fast approaching for retirees who turned 73 in 2024.
-
Rising AI Demand Stokes Undersea InvestmentsThe Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
-
IRS Layoffs Spark Delays, Doubt This Tax SeasonTax Season Tax experts say Trump’s downsizing of the IRS is already causing problems.
-
States with the Highest Income Tax Rates for RetireesState Tax You may reconsider living and retiring in one of these states due to high taxes.
-
AI Tax Scams Target Middle and Older Adults: What to KnowScams Whether you’re a retiree or Gen Z, scammers can gouge big financial losses with the help of artificial intelligence.
-
Tax-Deductible Home Improvements for Retirement in 2025Retirement Taxes Your aging-in-place plan could benefit from the medical expense tax deduction. But watch out for capital gains and property taxes.
-
Don’t Make These Five Mistakes on Your Tax ReturnTax Filing The IRS warns taxpayers to watch out for these common errors as they prepare to file.
-
You Don’t Want to Retire in Portugal: Here Are Three Tax Reasons WhyRetirement Taxes With the NHR benefit retiring and pension taxes increasing, you might rethink your retirement plans in Portugal.
-
Why Abolishing Florida Property Taxes is ProblematicProperty Taxes A bold proposal that aims to eliminate property taxes in the Sunshine State has roused concerns from economists, and rightly so.
-
First-Time Filing Taxes? Key Tax Tips to Know for 2025Tax Filing Preparing your IRS taxes for the first time may seem daunting, but here are some return preparation and filing tips to start.
