2005 ENERGY BILL - Prius $2750 Tax REDUCTION

It's official. I noticed on the USAToday.com website that Bush signed the Energy Bill into law.

Hmmm, time to put a deposit down on a 2006 and figure out what I'm going to do with my 2005. ;-)

 

Yep, it's all signed, for better or worse.

Now, when is he going to sign that darn Transportation Bill so us Californians can drive in the carpool lane!!!???

 

BTREPWR, you can donate it to me if u need to toss it somewhere far

 

2 questions

1. how do I apply for this tax reduction?

2. Do I qualify for this tax reduction if I have already bought my Prius?

Thanks

 

Thanks for the info IALTMANN sadly I have already purchased my Prius so no $2000 for me

 

Am in the only one who is thinking how nice it would have been to have this reduction back in 2004 (or 2005 for that matter). Thankfully we didn't pay much tax, but another $300 in return would have been really nice.

 

This new bill will actually hurt Prius sales if you read it carefully. Only the first lucky 60,000 with some unannounced overage will qualify for the credit. After that, it goes to zero! So this is a slap at Toyota which has the most hybrids and is designed to help other players get into the hybrid game. Since Toyota estimates they will sell double this number of Prius in '06 not to mention HiHy and others, you better act this year to get one very early in the new year if you want the windfall.

Here is the actually reduction formula:

Hybrid Car Tax Credit Phase-Out Details


Beginning January 1, 2006 and up through the quarter that the automaker sells 60,000 hybrid vehicles, 100% of the credit is allowed.
100% of the hybrid car tax credit continues for the next consecutive quarter.
The next two quarters after that, the tax credit is reduced to 50% of the original hybrid car tax credit.
Then, for the next two quarters after that, the tax credit is reduced to 25% of the original hybrid car tax credit.
Finally, the hybrid car tax credit for that automakers’ hybrids drops to zero.

Since they talk about manufacturer I assume anything put out under the Lexus badge counts against Toyota as well.

 

I hardly think that SUV sales will rise or fall on the whim of CAFE standards; I get passed all of the time by 80mph SUVs burning $3/gallon gas. A look around any parking lot shows a lot of SUVs driven by one person!

Face it people, for whatever reason, large SUVs sell well in this country and even Saint Toyota is playing up to the big SUV crowd. One does sell what one can, you know, and Toyota and GMC have found a ready market for high-profit vehicles in SUVs. BTW: Sales of SUVs is what makes enough excess money to research and develop alternate fuel vehicles.
My neighbor drives a Lincoln Navigator and a Mercedes SL500; her husband has a Dodge 2500 pickup. They use the Navigator to tow the 22ft boat to the river every 3-4 months. She would love to have a Prius (for the utility and features, NOT just the economy), but is rather stuck...

Should we just burn her at the stake now;-P???

 

I received a very comprehesive analysis from the US Department of Energy Alternative Fuel Hotline in Colorado. I tincluded links to various other sites, including the recent IRS Bulletin on the subject.

This is what was sent to me;

This email is from the U.S. Department of Energy’s (DOE) National Alternative Fuels and Clean Cities Hotlines in response to your request for information about the effects of the Energy Policy Act of 2005 on hybrid electric vehicle purchasing incentives. This credit is very complicated, but it generally provides more purchasing incentives that available in previous years.



The incentive is written in law as a CREDIT, not a DEDUCTION. The text of the law that establishes the new hybrid electric vehicle tax CREDIT begins with the statement below:

“IN GENERAL- For purposes of subsection (a), the new qualified hybrid motor vehicle credit determined under this subsection for the taxable year is the credit amount determined under paragraph (2) with respect to a new qualified hybrid motor vehicle placed in service by the taxpayer during the taxable year.â€

Therefore, the new credit is based on language that the taxpayer is entitled to the incentive the same year the vehicle is placed in service. Because we are not tax advisors, and our assistance is not considered “official guidance,†we suggest you contact the IRS Office of Associate Chief Counsel, Passthroughs and Special Industries at 202.622.3120. This is the office that handles the currently available deduction which is being phased out when the new credit takes effect next year. They might be able to offer some assistance with the interpretation of the incentive and the ability for taxpayers to realize the incentive. Again, there has been no “official†guidance from the IRS on this new credit yet. The incentive must still be incorporated into the IRS Code, and the IRS must establish a system for individuals to actually take the incentives.



Because the bill establishing the new hybrid vehicle credit was signed only a few days ago, please note that dealers might not be aware of how this will begin to affect their customers. Familiarizing yourself with the currently available deduction might help further your understanding of this issue. The currently available deduction is explained in IRS Publication 535, Chapter 12 (http://www.irs.gov/publications/p535/ch12.html). The FAQ “What is the difference between a tax credit and a tax deduction?†at http://www.eere.energy.gov/afdc/progs/ddow...afdc/FAQ/20/0/0 may also help. The selection from the energy bill can be found on the federal legislative search engine http://thomas.loc.gov under House Report 109-190 - ENERGY POLICY ACT OF 2005, Subtitle D, Sec. 1341.



Calculating Your Tax Credit:

As there has been no official guidance issued on this topic yet, our calculations are based on the information provided in the text of the House Report 109-190 - Energy Policy Act of 2005 (you can view this online at http://thomas.loc.gov). According to our calculations, a Toyota Prius would be eligible for a $2750 tax credit beginning in January 2006 (Please note, the new credit applies to property placed in service after December 31, 2005). This is a combination of two calculations: the fuel economy credit and the conservation credit (see calculations below). Again, as there has been no official guidance published on this topic yet, we suggest you continue to reference the Internal Revenue Service Web site (www.irs.gov) for updates and official calculations.



Data (using the Toyota Prius)

Model Year 2005 Prius city fuel economy as estimated by the U.S. EPA: 60 mpg

Model Year 2005 Prius vehicle inertia weight class is: 3000 lbs.

The corresponding 2002 model year city fuel economy for that vehicle inertia weight class is: 26.4 mpg



Fuel Economy Credit

The Prius would achieve about a 227% increase in fuel economy over the 2002 fuel economy standard set forth in the energy bill. This makes the vehicle eligible for a $2,000 tax credit according to the following table:



In the case of a vehicle which achieves a fuel economy

(expressed as a percentage) of the 2002 model year city fuel economy) of-


The credit amount is--

At least 125 percent but less than 150 percent
$400

At least 150 percent but less than 175 percent
$800

At least 175 percent but less than 200 percent
$1,200

At least 200 percent but less than 225 percent
$1,600

At least 225 percent but less than 250 percent
$2,000

At least 250 percent
$2,400.




Conservation Credit

Add to that the conservation credit amount of $750, calculated as the difference between:

(A) 120,000 divided by the 2002 model year city fuel economy for the vehicle inertia weight class, and

(B) 120,000 divided by the city fuel economy for such vehicle



With reference to the following table:



In the case of a vehicle which achieves a lifetime fuel

savings (expressed in gallons of gasoline) of--


The conservation credit amount is--

At least 1,200 but less than 1,800
$250

At least 1,800 but less than 2,400
$500

At least 2,400 but less than 3,000
$750

At least 3,000
$1,000.






Please keep in mind that the bill caps the number of people who can claim the deduction at 60,000 for each automaker until 2009, so the sooner you purchase the vehicle, the better. We suggest you also read the explanation of the credit provided at http://www.hybridcars.com/oil-dependence-p...olicy.html#bill. For information about additional incentives that may be available from your state, please see the Alternative Fuels Data Center Incentives and Laws Web site (http://www.eere.energy.gov/afdc/laws/incen_laws.html). Please let us know if you have additional questions.



* * * * *



Please contact the DOE’s National Alternative Fuels Hotline at 800.423.1363 or [email protected], or the Clean Cities Hotline at 800.CCITIES or [email protected], if you have any additional questions, would like hard copies of any of the documents found on the Alternative Fuels Data Center (AFDC) Web site (http://www.eere.energy.gov/afdc/), or would like to subscribe to either of two free e-newsletters, Clean Cities Now and/or the AFDC Monthly Update.





Thank you,



Stacy Putnam

ICF Consulting

Supporting the U.S. Department of Energy's

National Alternative Fuels and Clean Cities Hotlines



National Alternative Fuels Hotline

800.423.1363

[email protected]

http://www.eere.energy.gov/afdc/



Clean Cities Hotline

800.CCITIES

[email protected]

www.eere.energy.gov/cleancities/