Hybrid Tax Credit: Extend or No?

Jan. 16, 2007: USA TodayToyota: Extend Hybrid Tax Credit

Summary: "Toyota wants an extension of a federal tax credit that has delivered savings of up to $3150 to buyers of hybrid cars.

But some of Toyota’s rivals—even those that make hybrids—aren’t as enthusiastic.

Toyota, the biggest hybrid maker, is the only automaker so far to have reached the 60,000-hybrid-sales limit set by Congress in the legislation that allowed income tax breaks for buying hybrid cars as a way of encouraging fuel savings and cleaner air. The amount of the credit is based on fuel efficiency."

Having reached its limit on hybrid sales, Toyota must now try to sell them without benefit of the full credit. It’s currently worth half the original amount, which varied from $3150 for a Prius to only $1550 for a Lexus GS450h. On April 1, 2007, the credit will fall to one quarter of the original, and on October 1, 2007, the credit for hybrid Toyotas will dry up completely.

When considering whether to extend the credit, basically by removing the sales limit, several points should be examined from a public policy standpoint. What are the benefits of the credit, and who reaps them? Could such benefits be realized without the credit at all? Likewise, what are the costs of the program—and who bears that burden?

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  • David Brame

    I do not know what the law makers are thinking! They want less dependency on foreign oil (so they say) and they want cleaner air so why don’t they INCREASE the tax credit for those willing to buy hybrid cars? I drive 70 miles one way to work and have a 2000 Camry with 230,000 miles on it. I would love to replace it with a Hybrid Camry but unless the tax credit is there to help reduce the cost I will likely have to purchase a full gasoline model. Whatever I buy IT WILL be a Camry and I would like for it to be a Hybrid but I need help!

  • Todd

    I agree that the tax credit for Hybrids should be continued, with no “sales” limits. I purchased an 06 HCH and will get the credit, but I must admit without the credit I would never have purchased the Hybrid over the non-hybrid Civic and probably would not have even looked at Hybrids or smaller vehicles at all. That said, I have owned my 06′ HCH for exactly one year and have used 274.38 LESS gallons of fuel this past year in my daily commute alone! That is when compared to the vehicle I was driving! In the process, I fell in love with Hybrid technology and would consider our next Vehicle (Larger Family Type) to be a Hybrid over my wife’s current 05′ SUV. IMO, I hope they continue the tax credit for Hybrids and other efficient technologies (Fuel Cell, Clean Diesel, etc…).

  • James

    To deny a tax credit or remove it or even limit it and preach a reduction in foreign oil dependence would be an utter contradiction. Our gov’t must renew and extend this credit.

  • Terri Kennedy

    Please renew and extend the hybrid tax credit with the taxes. :) Thank you

  • Mike Kelley

    I drive an ’03 Toyota Camry, financed it over 5 years, and love it. Upon it being paid off, I would gladly upgrade to the Camry Hybrid – if there is still a tax credit. I like the idea of fuel efficient and environmentally friendly vehicles, and less dependency on foreign oil – We need the tax credit extended.

  • Aaron

    I bet the whole limitation on hybrid tax credits was politics in action…oil companies and/or the “lazy” U.S. auto companies didn’t want hybrids to ruin their sales figures, so they pressured congress to put a rediculous limit on the tax credits. :(

  • dave

    The whole oil dependence thing is the american peoples problem, if we dont want to use so much foreign oil than We need to stop buying so much, we want suvs that get 12 mpg and cry about $3.00 gallon gas, only we the poeple can do something and it starts with one, each of us can make a difference. vote with your wallet

  • Ken Morosko

    We purchased a ’05 Prius new and it is by far the best vehicle we ever owned. I’m in the market for a second new car but strongly feel the tax credit should be extended. I recommend everyone to hound congressional leaders and local leaders as well. While I generally support our government, it irks me to no end when they preach conservation and the need for reduced oil dependency and at the same time, reduce or take away the tax credits. Hellllloooooooo!!!

  • Bernard K

    I’ve had a Honda InSight for almost 2 years now and love it! We are looking to buy another small family car, and the Prius is very appealing, extending the tax credit would encourage this purchase now.

    If America truly wants to improve our national security we need to reduce our oil dependency. High fuel efficiency for transportation has to be part of the solution. Tax credits can help encourage purchase of higher fuel efficiency vehicles.