xcel
06-14-2006, 12:49 PM
Federal tax deduction for hybrids makes price easier to swallow. (http://www.dispatch.com/business-story.php?story=dispatch/2006/06/14/20060614-D1-03.html)
Paul Wilson - The Columbus Dispatch - June 14, 2006
http://www.cleanmpg.com/photos/data/501/Euro_Prius_II.jpg
When Fred Yaeger bought his first hybrid car nearly five years ago, he was more concerned with the planet than his wallet.
"I thought it was a little costly, but I wanted to vote with my dollars to push the technology across the world," said Yaeger, 59, of Worthington.
That didn’t stop Yaeger from taking advantage of a $2,000 federal tax deduction for hybrid buyers. Yaeger, who now has two Prius’ in his household, hopes such incentives can "lower the bar for more people to enter the hybrid market."
Tax breaks alone likely won’t push Americans toward hybrids. But federal incentives, which Congress beefed up in the 2005 Energy Bill, have become more important factors in the hybrid debate - even if they aren’t as stirring as high gas prices or environmental concerns, experts say.
"I think the incentives, along with increased gas prices and other issues, have spurred increased sales," said Sam Spofforth, executive director of Clean Fuels Ohio, a nonprofit group based at the Ohio State University Center for Automotive Research. Spofforth said incentives are partly responsible for making hybrids more of a "mainstream product." Americans bought more than 200,000 hybrids last year, more than double the 2004 total but still a small percentage of the 17 million automobiles sold in this country. This year, hybrid sales are expected to reach about 300,000.. Customers must sometimes wait months to buy a hybrid, with delays in Hollywood reaching 16 weeks, according to Hybridcars.com. But for some areas and some models, there is a short wait or none at all, according to the site.
As part of the Energy Bill, hybrid buyers are eligible for tax credits of $1,300 to $3,150, depending on which car they buy, according to Hybridcars.com. The credits are "dollar-to-dollar" drops in what hybrid buyers must pay the federal government in taxes.
In previous years, hybrid buyers could deduct $2,000 from their adjusted gross federal income, which lowered how much they pay in taxes.
"The $2,000 deduction, depending on your income, was worth $400 or $500 max," said Brett Berman, editor of Hybridcars.com. "This year, the Toyota Prius will get you $3,150" in credits.
Tax credits can help erase part of the roughly $3,000 premium customers pay for a hybrid model compared with a gasoline model, Berman said. But for some hybrids, the different can reach, or surpass, $8,000, according to Consumer Reports.
The Prius is the top-selling hybrid in the U.S., and it offers the largest tax credit of any hybrid vehicle, according to Hybridcars.com. Americans bought nearly 40,000 Prius’ in the first five months of the year.
In contrast, only about 20,000 hybrid cars were sold in the U.S. in 2001, the year Yaeger and his wife, Lisa Staggenborg, bought their first Prius. The couple’s two Prius’ each get more than 44 miles per gallon.
But hot Prius sales could block future buyers from getting the tax credit. Hybrid buyers can get full federal credit only until the automaker that produces the vehicle sells 60,000 hybrids. Toyota hit that point recently, counting purchases of the Prius, the Highlander, the new Camry and Lexus hybrids.
The full tax credit is available until the end of the quarter when the automaker hits that mark. In September, the credit will be cut in half for six months, fall to 25 percent for six months then expire for Toyota hybrids on Oct. 1, 2007. There have been discussions about raising or scrapping the cap, Spofforth said.
But if the legislation doesn’t change, it will put automakers such as Toyota, Ford and Honda, the dominant players in the U.S. hybrid market, at a disadvantage, said Edward B. Cohen, Honda’s vice president for government and industry relations. Cohen said the hybrid aspect of the legislation is well-intended but poorly conceived.
"Companies who are selling hybrids now will have exhausted their credit at a time when the latecomers will have their hybrids to sell," he said. "They will have a government-created advantage."
The legislation also should be corrected to consider highway mileage, not only city mileage, when determining the amount of each vehicle’s tax credit, Cohen said.
Paul Wilson - The Columbus Dispatch - June 14, 2006
http://www.cleanmpg.com/photos/data/501/Euro_Prius_II.jpg
When Fred Yaeger bought his first hybrid car nearly five years ago, he was more concerned with the planet than his wallet.
"I thought it was a little costly, but I wanted to vote with my dollars to push the technology across the world," said Yaeger, 59, of Worthington.
That didn’t stop Yaeger from taking advantage of a $2,000 federal tax deduction for hybrid buyers. Yaeger, who now has two Prius’ in his household, hopes such incentives can "lower the bar for more people to enter the hybrid market."
Tax breaks alone likely won’t push Americans toward hybrids. But federal incentives, which Congress beefed up in the 2005 Energy Bill, have become more important factors in the hybrid debate - even if they aren’t as stirring as high gas prices or environmental concerns, experts say.
"I think the incentives, along with increased gas prices and other issues, have spurred increased sales," said Sam Spofforth, executive director of Clean Fuels Ohio, a nonprofit group based at the Ohio State University Center for Automotive Research. Spofforth said incentives are partly responsible for making hybrids more of a "mainstream product." Americans bought more than 200,000 hybrids last year, more than double the 2004 total but still a small percentage of the 17 million automobiles sold in this country. This year, hybrid sales are expected to reach about 300,000.. Customers must sometimes wait months to buy a hybrid, with delays in Hollywood reaching 16 weeks, according to Hybridcars.com. But for some areas and some models, there is a short wait or none at all, according to the site.
As part of the Energy Bill, hybrid buyers are eligible for tax credits of $1,300 to $3,150, depending on which car they buy, according to Hybridcars.com. The credits are "dollar-to-dollar" drops in what hybrid buyers must pay the federal government in taxes.
In previous years, hybrid buyers could deduct $2,000 from their adjusted gross federal income, which lowered how much they pay in taxes.
"The $2,000 deduction, depending on your income, was worth $400 or $500 max," said Brett Berman, editor of Hybridcars.com. "This year, the Toyota Prius will get you $3,150" in credits.
Tax credits can help erase part of the roughly $3,000 premium customers pay for a hybrid model compared with a gasoline model, Berman said. But for some hybrids, the different can reach, or surpass, $8,000, according to Consumer Reports.
The Prius is the top-selling hybrid in the U.S., and it offers the largest tax credit of any hybrid vehicle, according to Hybridcars.com. Americans bought nearly 40,000 Prius’ in the first five months of the year.
In contrast, only about 20,000 hybrid cars were sold in the U.S. in 2001, the year Yaeger and his wife, Lisa Staggenborg, bought their first Prius. The couple’s two Prius’ each get more than 44 miles per gallon.
But hot Prius sales could block future buyers from getting the tax credit. Hybrid buyers can get full federal credit only until the automaker that produces the vehicle sells 60,000 hybrids. Toyota hit that point recently, counting purchases of the Prius, the Highlander, the new Camry and Lexus hybrids.
The full tax credit is available until the end of the quarter when the automaker hits that mark. In September, the credit will be cut in half for six months, fall to 25 percent for six months then expire for Toyota hybrids on Oct. 1, 2007. There have been discussions about raising or scrapping the cap, Spofforth said.
But if the legislation doesn’t change, it will put automakers such as Toyota, Ford and Honda, the dominant players in the U.S. hybrid market, at a disadvantage, said Edward B. Cohen, Honda’s vice president for government and industry relations. Cohen said the hybrid aspect of the legislation is well-intended but poorly conceived.
"Companies who are selling hybrids now will have exhausted their credit at a time when the latecomers will have their hybrids to sell," he said. "They will have a government-created advantage."
The legislation also should be corrected to consider highway mileage, not only city mileage, when determining the amount of each vehicle’s tax credit, Cohen said.