The Basics of a Hybrid Tax Credit

A hybrid tax credit is a type of tax credit that you can obtain by purchasing a hybrid automobile. This provides you with a dollar for dollar reduction of your tax liability at the end of the year. Here are the basics of the hybrid tax credit.

Hybrid Tax Credit

The hybrid tax credit was enacted by the US Energy Policy Act of 2005. According to this legislation, auto manufacturers would be able to sell 60,000 cars with a full tax credit to consumers. After that 60,000-car limit was reached, the credit would be reduced. The amount of credit that one can receive by purchasing a car will differ by which model you buy. New cars that are created as hybrids can be added to the list at any point. 

Running Out

Certain auto manufacturers have already run out of hybrid tax credits because they have reached their 60,000 unit quota. Some manufacturers still may have some credits left or a reduced credit. 


This program was enacted to provide an incentive for consumers in the United States to help the environment. By purchasing a hybrid car, you will lower the amount of gas that you use, and this gives you a financial incentive to consider. 

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