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TechnographNew Energy Act changes tax credits for purchasing hybrids
By Kristen Sackley
Posted: 3/14/07 Section: News
While many people buy hybrid vehicles to save the environment, others are purchasing hybrids for more economical reasons. Hybrid electric vehicles have been a part of mainstream society for multiple years, but since the government passed the Energy Act of 2005, things have been changing for hybrid car owners.
Philip Krein, professor of electrical and computer engineering who has worked with hybrid vehicles, said there is a big difference between the tax credit that comes with the new Energy Act and the previous tax deduction that buyers used to receive.
Krein said a hybrid tax deduction allowed the owner to reduce a certain amount of their income to be taxed.
Now consumers get a tax credit, meaning that money comes off of their taxes completely, not just off their income when figuring the taxes.
According to the U.S. Department of Energy, the other main aspect of the act regarding hybrids is the phasing out of these tax credits.
Once a manufacturer sells 60,000 hybrid vehicles, the tax credits for customers who buy from that company begin to be phased out over a period of time.
Although this might seem like a negative aspect to the act, George Gross, professor of electrical and computer engineering who works with the economics involved with engineering issues, said this may not be the case.
"This incentive has worked very well because it's still very difficult to get a (Toyota) Prius in different markets. People are on waiting lists," he said. "It doesn't seem to necessarily impact the demand for these vehicles."
But hybrid owners may feel differently, especially since Toyota, one of the major manufacturers of hybrids, has already reached the 60,000 vehicle limit and will end their tax credits in October 2007 because of the phase out.
"I think it's being phased out too soon," said Jason Coyne, a Toyota Camry hybrid owner from Iowa and administrator of a hybrid blog.
"I think (the act) would have made more sense based on the total number of hybrids sold, regardless of manufacturer," Coyne said. "Per manufacturer doesn't really make a lot of sense to me ... It punishes the company's that got into the technology early."
Philip Krein, professor of electrical and computer engineering who has worked with hybrid vehicles, said there is a big difference between the tax credit that comes with the new Energy Act and the previous tax deduction that buyers used to receive.
Krein said a hybrid tax deduction allowed the owner to reduce a certain amount of their income to be taxed.
Now consumers get a tax credit, meaning that money comes off of their taxes completely, not just off their income when figuring the taxes.
According to the U.S. Department of Energy, the other main aspect of the act regarding hybrids is the phasing out of these tax credits.
Once a manufacturer sells 60,000 hybrid vehicles, the tax credits for customers who buy from that company begin to be phased out over a period of time.
Although this might seem like a negative aspect to the act, George Gross, professor of electrical and computer engineering who works with the economics involved with engineering issues, said this may not be the case.
"This incentive has worked very well because it's still very difficult to get a (Toyota) Prius in different markets. People are on waiting lists," he said. "It doesn't seem to necessarily impact the demand for these vehicles."
But hybrid owners may feel differently, especially since Toyota, one of the major manufacturers of hybrids, has already reached the 60,000 vehicle limit and will end their tax credits in October 2007 because of the phase out.
"I think it's being phased out too soon," said Jason Coyne, a Toyota Camry hybrid owner from Iowa and administrator of a hybrid blog.
"I think (the act) would have made more sense based on the total number of hybrids sold, regardless of manufacturer," Coyne said. "Per manufacturer doesn't really make a lot of sense to me ... It punishes the company's that got into the technology early."
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