Worth it? Am I understanding this?

The tax-credit is $4,502 for Prius Prime and the limit available has not been reached yet. There's plenty for all Toyota purchases for over a year still.

As for being eligible, it is based off of your tax liability, not whether you normally get a check or pay. That's the amount calculated against your wages... and most still working 40-hour jobs have way more than the $4,502 allowing them to collect the full amount.

 

The $200 is for road use taxes you normally pay as part of the cost of gasoline. For a pure electric I understand the $200 but since the typical Prime user will probably still buy some gasoline it’s less fair IHMO.

 

Yeah, 1) sucks, my state charges $300 for hybrids if any kind (on top of property taxes on all cars of any kind every year). The reasoning is you are buying less gas for the same number of miles, and most road maintenance is paid via gas taxes, so you're not paying enough for the wear and tear you do. I agree that it's incentives on one side and disincentives on the other, but on amounts like that I don't really care as I'm still paying less per year than a guzzler car.

As for 2), John has it correct.

 

That is not your LIABILITY, which is a much higher value than WITHHELD.

You'll will need your federal tax form to find it. On my 2017 filing, it was line #27.

 

But OP is commenting that he got a refund after only $1500 had been withheld. I suspect his tax liability was very low, less than $1500. Thus if it stays the same for the year he purchases the PRIME then only a small portion of $4502 will be credited in his case.

 

it's only worth it if it's worth it to you

 

My uneducated guess is you would get a bigger tax refund. It's not so much owing vs refund as what tax bracket (percent) you're paying; if you're making income enough to pay taxes it'll reduce what you owe, or increase refund. And the higher your tax bracket the more you recoup.

 

It’s a tax credit: It reduces the amount of *tax* you pay by up to $4200. That’s a different topic from whether or not you get a refund on your tax withholding. I bet it’s quite likely that you’re paying more than $4200 in taxes.

“Bummer!” regarding the $200/year. That sort of thing — additional fees to cover for lost gasoline-tax revenue — is on the rise.

 

1) YOU have to pay your share of "road use" taxes just like everybody else. If you are not paying it with the price of GAS you burn, then it is only fair that you pay it another way.

2) Forget withholding and refunds.
The tax you OWE is the amount of money that Uncle Sam takes from you in the end.......and keeps.
The actual tax credit that you receive can not exceed the amount that you owe.

When you file your return, I believe that is on a line labeled "Tax owed".
You can not get a credit for more than you are obligated to pay.

 

Look at it this way. If you get a $4000 credit next year on your taxes and the State charges you $200. a year for owning the car, you will be ahead of the game for the first 20 years.

 

Not true. Your final refund after withholding is irrelevant, unless your refund was as big as all your withholding plus any estimated tax payments combined.

Look for a line on your tax forms saying Total Tax. On my 2018 Form 1040, this was Line 15. Now that I file the new 1040-SR (senior), it is Line 16.

If you also have any other tax credits, the interplay between them might reduce total credits.

2017 was still using the old forms, before the new "shorter" "post card" style forms were imposed on us (requiring many so-called post cards to replace a few pages.) And I wonder if you were filing the 1040-A or 1040-EZ, as it was Line 63 on my regular 1040.

This IRS page shows the credits per car model, and the phase-out schedule for GM and Tesla. No other manufacturers are having their credits phased out yet:

IRC 30D New Qualified Plug-In Electric Drive Motor Vehicle Credit | Internal Revenue Service

I haven't re-located the separate page showing how many qualifying cars have been sold. But do note that the phase-outs run by calendar quarter, with a starting delay between 3 and 6 months. I.e. the car makers report sales each quarter, then the IRS puts out advance notice that phase-outs begin the following quarter. That legal notice delay guarantees that once the magic car breaking the limit is sold, buyers for at least the next 3 months (and up to 6 months, depending on just when it happens during a quarter) still qualify for the full credit. Then phase-out takes 12 months, with buyers still getting reduced credit (50% for 6 months, then 25% for 6 months).

So if your income tax is as low as suggested, you may not even lose anything by waiting until the phase-out starts.

 

If that was all that was withheld (including any separate quarterly estimated tax payments such as non-wage-earners/retirees such as me must pay), and you got part of that back as a refund, then this tax credit would mean your "refund" would be boosted to the full $1500 withheld, but no more.

(This also presumes no other taxes or credits or complications. Such additional items are rather common, but beyond the scope of what any of us know about your taxes.)

Not if his total tax bill is under $1500.

 

FWIW, my reasons for owning and driving a Prius Prime are not entirely financial: A lot of it is just because I really “get into” its efficiency and safety, and because I’ve gotten to where gasoline, gas pumps, ICEs, and gas stations just plain disgust me!

And speaking of finances, gas stations are a great place to get your credit card skimmed and ID stolen.

Actually, I think the main way the Prius Prime saves you money, is that you can put so few miles on the engine per year, that the car will last you for much longer than most any other car! If I need to spend $35K on a car, I’d prefer to do so once every 20 years rather than once every 12 years!

I’m approaching 60 years old in a few months, and there’s a fair chance that I won’t ever need to buy another car! Of course, I might do so anyway just because I want to, but if so, I bet I can get pretty good resale value on this beast.

 

I agree with you on the non-financial benefit of owning fuel-efficient Prius Prime. After all, I am charging my PRIME even though it is costing me about 40% more to drive it on wall charged EV mode compared to the gas engine-driven HV mode. The only thing is that I kinda doubt the 20 years of ownership. I don't know if the traction battery will last that long for one thing. And even if the battery lasts that long, in my region, no car will last longer than 15 years unless it is built purely out of carbon fiber body or something that is completely rustproofed material.

Currently, my expectation for Prius PRIME is trade-in and buy a new and better car (Prime or other plug-in and maybe eventually a BEV) in 3-5 years.

 

Thankfully, Austin TX very rarely freezes or snows, and even when it does they usually sand the roads rather than salting them, so thankfully, rust is not a huge issue for us.

I fully expect the battery capacity to drop considerably over the next dozen years or so, but even if it deteriorates to 10 miles, by that time, the engine will still only probably have ... something like 60K miles in it, with lots of useful life still in it!

FWIW, usually, for us, charging from home works out to around 40% cheaper per mile than gas, but with gas prices at their COVID19-inspired low, it’s running about even currently.

 

how much is a kwh in your neck o the wood?

 

I don't think it has anything to do with what you owe. It's the amount of federal tax you are hit with each year. It's based on what you make each year. The more you make, the more tax you owe. This is the amount you could reduce by up to $4502. It has nothing to do with what you withhold every check or don't withhold.