Tax incentives for hybrids dropping | Rpmgo.com

With gas prices exploding, hybrids became very popular in the United States and are selling like crazy. However, we might see these cars’ prices rising, because some of these no longer qualify for the tax break or are about to see it reduced sharply. Affected by this measure are the three most popular hybrids sold in America, the Honda Civic hybrid, the Toyota Prius and the Toyota Camry hybrid.

After last fall the Prius and the Camry saw their $3,150 tax credits disappear, the Honda Civic hybrid’s tax credit was cut in half, starting Tuesday, July 1st, from $1,050 to $525. This happened after the original $2,100 tax credit was cut in half in January.

According to the 2005 federal law that established the hybrid credit, the tax break begins to phase out after a manufacturer sells 60,000 qualifying vehicles. Because of heavy demand for the Prius, Toyota reached that benchmark early in the program, and tax breaks for its Toyota and Lexus brand hybrids were gone by October 2007.

This tax credit cuts are not very popular, with a lot of people believing that the government should support hybrid sales, not increase the taxes. “We need to be reducing our dependence on oil, so why are we taking away something that will encourage people to do that?” asked Ailis Aaron Wolf, spokeswoman for the advocacy group 40mpg.org, which wants to raise mileage standards.

So, what will happen next? Will hybrid sales drop? Honestly, with gas prices skyrocketing, I don’t think so, on the contrary.

Post tags : camry, civic, Honda, Hybrid, prius, taxes, Toyota