Thinking of buying a hybrid car? Do it now if you want to take advantage of federal tax breaks.
A little-known provision of the tax break enacted by Congress to encourage the development of the efficient vehicle market will make the tax breaks disappear on the most popular model, the Toyota Prius, before the fall, and Honda's models will come without rebates by the end of 2008, according to a story in today's USA Today.
The tax breaks begin to expire once a car maker has sold 60,000 vehicles. Buyers get the tax break through the quarter when the automaker hits that milestone and the next quarter, then half as much for six months after that, and half as much again for the next six months. Toyota's popular Prius is in that final phase, meaning buyers today get about $787.50 -- 25% the rebate buyers did a year ago.
According to USA Today, Honda's 2007 Civic hybrid, which now qualifies buyers for a $2,100 rebate, will hit the 60,000 threshold this summer, meaning the rebate will drop to $1,050 in January 2008, $525 in July and $0 by the end of the year.
Hybrid vehicles have proved popular with buyers, and they emit far less pollution, and consume far less gasoline than many other models on the market. Congress ought to look at extending these tax breaks now, so buyers with a borderline budget won't be discouraged from investing in a vehicle that will save them in fuel costs over the long haul.
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