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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