Honda Reaches Hybrid Tax Credit Cap

Nov. 20, 2007: Source – Houston Chronicle

HOnda Civic Hybrid

The federal tax credit for buying Honda hybrid vehicles will begin to phase out at the end of this year. The hybrid credit, designed to motivate sales of fuel-efficient, eco-friendly cars, stays in effect until an automaker sells a total of 60,000 hybrids. Once that limit is reached, the tax incentive is phased out over the following year, until the credit is no longer available for a specific carmaker.

Honda becomes the second automaker to reach the sales limit and initiate the phasing-out process. The incentive for Toyota hybrids began phasing out in June 2006 and does not carry any tax credit for purchases made after Sept. 30, 2007.

Consumers who purchase a Honda hybrid before the end of the year can still benefit from the full tax credit, which is $2,100 for the Honda Civic Hybrid. The tax credit will be cut in half beginning on Jan. 1, 2008. Another reduction will occur after July 1, 2008, reducing the incentive by 50 percent yet again—to $525 for the Civic Hybrid.

Ford, GM, and Nissan will continue to offer tax credits at their full value—as much as $3,000 for the 2008 Ford Escape Hybrid. These three companies are not expected to reach the 60,000 vehicle cap before 2009, when the incentive laws will be reconsidered or entirely discontinued. New energy legislation—which could include tax incentives for hybrids, clean diesel vehicle, and cars that run on alternative fuels—is currently being considered on Capitol Hill.

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  • larryG

    This is just what we need in the era of post-Peak Oil and global warming: make fuel-efficient cars more expensive! D’oh!

  • Elfinsong

    Let them eat cake!
    Political BS
    How about all the rich non-caring politicians and corprate big whigs give back by buying hybrids for all who can’t afford them.
    Maybe then they would want the tax credit back in place.
    EAT THE RICH!!!

  • Max Reid

    Civic-Hybrid will become tougher to sell. Probably Honda has to reduce the cost by 1K just like Toyota did with Prius.

  • Jessica

    Why would you tell politicians that you don’t like to go eat cake? And then later tell them to EAT THE RICH? This is way to confusing for me!!

  • Jessica

    This is about the Global Warming thing.. I forgot to say that before :$

  • Collin

    Is anyone from Honda reading this? Why is the HCH only available in boring colors? How about a nice RED or a wild ORANGE, metalic COPPER or Bahma BLUE? I would have considered the HCH if it had a little more sex-appeal!!!

  • SolarDEK

    According to the IRS website,
    http://www.irs.gov/newsroom/article/0,,id=157557,00.html

    the Hybrid Tax Credit starts phasing out the second quarter after the manufacturer sells (“places into service”) 60,000 hybrid vehicles.

    This quarter ends Dec 30, 2007.
    The next quarter ends March 31, 2008 and that means the tax credit starts phasing out April 1, 2008. (No fooling.)

    I guess the newspaper editors don’t know how to read (or understand the IRS rules).

    Supporting evidence. Toyota hit the 60,000 mark May 2006. The tax credits did not start phasing out until Oct 1, 2006.

  • SolarDEK

    I stand corrected.

    Honda hit the 60,000 mark early in September 2007,
    So the clock started ticking Sept 30.

    and consequently, Jan 1, 2008 is the correct date for the start of phasing out the tax credit