Tax Incentives For Alternative Fuel And Hybrids

Added August 22, 2005 by Think Glink Staff

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Summary: If you're considering a Hybrid or Alternative Fuel automobile, the government may be willing to give you a break. Qualifying electric vehicles and clean-fuel vehicles (including gasoline/electric hybrids) purchased new are eligible for federal income tax incentives. Some state and local governments also provide incentives for alternative fuel vehicles.

Q. What tax incentives are available for alternative fuel and hybrid vehicles?

A. Qualifying electric vehicles and clean-fuel vehicles (including gasoline/electric hybrids) purchased new are eligible for federal income tax incentives.

Buying clean-fuel vehicles? Take advantage of a one-time tax deduction up to $2,000

Purchasing electric vehicles? You can get a one-time tax credit up to $4,000 per vehicle. The current incentive is scheduled to phase out in 2004-06.

Important: Congress is currently considering legislation that may alter the tax incentives for hybrid vehicles. We will provide additional information if any of these incentives change.

Some state and local governments also provide incentives for alternative fuel vehicles, so you may want to check with your state or local government. The U.S. Department of Energy's Clean Cities Vehicle Buyer's Guide for Consumers may also have useful information on state/local incentives.

Return to Frequently Asked Questions about Buying Cars

Published: Aug 22, 2005

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