Hybrid Car Tax Break

UPDATE:  As of 2011, the tax rebate program has been shut down indefinitely.... (it's the economy, plus the fact that LOTS of people are buying hybrids now; the government would go 'broker' if they reimbursed every hybrid vehicle buyer now :-)

A hybrid car tax break was one of the big incentives to buying a hybrid back in 2006. The feds rewarded you for your 'green efforts.' The reason is because of the higher prices that hybrids (at the time) cost, resulting in fewer sales. The government felt responsible for not helping Detroit keep up with Japan (which was true), so they created an incentive for Amerians to go hybrid.

The Japanese out-engineered Detroit automakers shortly after President Clinton stared the hybrid-electric car program back in 1993. U.S automakers, responding to lackluster sales from their crappy-in-comparison technology - made a complete withdrawal from the hybrid car program by 2001.

By this time, the Toyota Prius was everywhere, with Honda hybrids being imported in large numbers too. Where was the U.S. automakers during this?  Ford and a couple other Detroit automakers were quietly making deals with Toyota to license their technology.

...So now you've got the suddenly-caught-up-with-the-Japanese-engineering Ford hybrids.

Anyway, the Federal tax incentive program is a pretty good deal, and it's written to reward those good folks who elect to go for the really "good" hybrids. That is, the hybrids that substantially improve on their gasoline-only counterparts. The bigger the gas savings, the bigger the tax credit.

Here's how it used to work, and why the program failed:

Every person who bought a hybrid vehicle after JAN 1st, 2006 was eligible for a tax credit up to a max of $3400, based on how the particular vehicle that he bought compared to the average all-gasoline car of its class and weight from 2002.

Specifically, buyers received a $400 tax credit for every 25% improvement in efficiency over their gasoline-only counterparts.

But, there was a catch: 

This credit was given to only the first 60,000 vehicles sold by each different manufacturer. Some--like Ford, for instance, didn't even make 60,000 hybrids through 2006 and half of 2007. So each person who bought a Ford hybrid got the credit. But nobody wanted a Ford hybrid at the time.

Toyota, however, blew through their 60,000 quota quickly, leaving the remaining buyers without a tax credit.

But Alas, Ford - and the United States Automakers - Caught Up by 2011!

It's interesting to note, however, that as of 2011, the Ford Fusion hybrid is on equal footing with the Prius! These two vehicles are the best-selling hybrids in the U.S. for 2011! Talk about a comeback.

Next page, the Honda Civic Hybrid...

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