This is still my first day at PriusChat. Really enjoying this forum. I have been doing some research on the tax benefit of purchasing a Prius. There are news every where about the Bush signing of the Energy Bill before August 1st, 2005. The current Energy Bill has a direct impact on the tax savings of future Prius owners. We have been talking about the reduced deduction of $500 starting tax year 2006, and encouraged many to buy in 2005. If the energy bill is passed, this is how it will look like. (My interpretation. Correct me if I am wrong...) Energy Bill (see page 1091-1101) The future credit is calculated by the weight class and the relative city driving fuel economy improvements over the same weight class of MY2002. Proposed reference table MY2002 - 2000lb class = 35.2mpg . . . MY2002 - 2750lb class = 28.8 mpg MY2002 - 3000lb class = 26.4 mpg . . MY2006 Prius 2860lb = 60 mpg (assumption) MPG improvement over MY2002 = 227% Improvement is in the 225%-250% bracket = $2000 credit Can any tax expert please explain how, if any, $2000 credit is different from $2000 deduction? Blessings, dKnY
Hi there, welcome to PriusChat! Quick reference: Tax deduction: takes $2K off your taxable income. Tax credit: takes $2K off the tax you owe. Needless to say, the tax CREDIT is MUCH more beneficial. I sincerely hope they approve this as a credit, not a deduction! I guess we shall see in the future.
Why would buying in 2005 affect the 2006 tax year? Is it a deduction/credit every year you own it? Regards, Kevin in Oh-hi-o <><< http://KevinArnold.US/
buying in 2005 will allow you to take a one-time credit on your 2005 tax return. the tax deduction is currently set at $2000 for anyone who has purchased a Prius this year. but anyone who buys after december 31 will lose out on the $2000 deduction and instead only get a $500 deduction if the new energy bill does not pass. that's why people are being encouraged to buy in 2005- bigger savings come tax time.
Good news! House is going to vote on the energy bill on Thursday and senate is voting on Friday. President Bush will sign it before Aug 1st. It is broadly expected to be easily passed. Hybrid tax credit is a very small portion of the bill but it will definitely help the industry in developing more efficient hybrid cars as the future tax credit is based on the improved efficiency of hybrids. Future hybrid owners will continue to have incentives. Dean
:roll: LAST YEAR (2004) Texas had an incentive but strangely for a limited total dollar limit for all - that is to say: "We will fund this many dollars in total for these incentives." My purchase occurred well past the last available funds. Seemed to me to be very short-sighted to impose a total dollar limit rather that a continuing encouragement to get more "green" cars on the Texas highways.
If this turns from a $2,000 Deduction to a $2,000 Credit then I'm buying another Prius. No time to read the regs though. Waiting patiently for an analysis as it pertains to hybrids.
OMG! I just read the link that azemission posted. It is a TAX CREDIT! Reference pp. 1092-1093 for proof. AMAZING! I hope my 2005 qualifies!
It sure looks like Prii purchased in 2005 would qualify. The bill talks about taxable year but I saw no reference to purchases must be after the bill passes or some such other effective date. I'm no lawyer, tho'. I redid azemission's analysis for myself and I think he's right on. I was unsure about that inertia weight class stuff but did a Google on the phrase. I found a document that talks about the Prius being in the 3000 class: http://www.epa.gov/otaq/cert/mpg/fetrends/r01008.pdf This seems like a true Christmas in July. I guess I shouldn't complain about an incentive for me to already have bought my 2005 Prius. Maybe it's an incentive for being a forward thinker.
Can't this tax credit/deduction carry over if you bought a Prius in 2005, sold it in 2005 or 6 getting near MSRP price (or over!), and then buying the new 2006 model which would include your 2005 credit/deduction (depending on sell price) + 2006?
If it's anything like the present $2,000 tax DEDUCTION, if you sell your Prius within I believe 3 years time, you will have to prorate the deduction.
House just passed the bill. We are now waiting for senate to vote on Friday. See CNN news on the House passing the Energy Bill Dean
Do we know that this version of the bill has the "okay" to allow Cali to put hybrids in carpool lanes?
The Transportation Bill is the one that would allow states to allow hybrids in HOVs. Here's the latest on it: http://news.yahoo.com/s/ap/20050728/ap_on_...ngress_highways
Great, a tax credit. Cash in the pockets to ignore the larger problem at hand, which is the held off EPA report that the NYTimes leaked, stating that car mpgs are down, that 40% of all oil consumption goes into our vehicles, and that the energy bill on the table does nothing to fix the emission or mileage requirements. See the link here: http://www.nytimes.com/2005/07/28/business...UCh0tcazCxW4CxQ How about we give our deductions and credits back if they promise to reinstate a form of mpg requirements? -m.
Can anyone verify that it's moving to a $2,000 credit? Not to doubt the veracity of azemission's post, because I've read the documentation myself, but I was hoping that someone could read all of the legaleese and be sure we are all translating this accurately.
