Buy a Hybrid Car, Get a Tax Break

The United States government said Friday that would offer tax breaks in 2006 to taxpayers who opt to buy hybrid gasoline and electronic vehicles. Tax breaks of up to $3,400 would be awarded based on the fuel-efficiency of the vehicle purchased or leased.

U.S. Treasury Secretary John Snow made the announcement at Ford research center near Detroit. "I'm pleased to announce the issuance of IRS guidance for the hybrid vehicle tax credit because the development and use of hybrid vehicles is a key step toward reducing gasoline consumption, emissions of air pollutants and greenhouse gas emissions," he said.

The Treasury also has plans for tax credits involving fuel cell, alternative fuel, and hybrid heavy trucks. However, Snow said the agency would be providing guidance for those types of vehicles at a later date.

The credits are part of the Energy Policy Act signed into law in August of last year. The credit is available for any car purchased after January 1. Furthermore, if an individual or business purchases more than one hybrid vehicle, a credit could be claimed more than once.

With the automobile industry struggling to increase sales, and a large number of domestic manufacturers now offering some kind of hybrid option, hopes are that the tax credit may help turn Detroit's sagging fortunes.

Those interested in the credit should act quickly, as only 60,000 credits per manufacturer would be available.

"I commend the manufacturers who are making these energy-efficient and environment-friendly vehicles and hope that the President's energy bill proves to be an important step in their rising prominence on American roads," Snow said.