Hybrid Vehicle Credit

The IRS has acknowledged the manufacturer's certification on a number of vehicles for the hybrid vehicle credit. This means you can rely on the manufacturer's certification that 1) the vehicle is eligible for the credit, and 2) the amount of the credit is accurate.

To qualify for the credit, you must have purchased the vehicle after Jan. 1, 2006. The credit amount is based on the vehicle's fuel efficiency. See the list of eligible vehicles.

If you want to take advantage of the hybrid vehicle credit, you may want to buy early. The full credit is only available for a limited time. After the quarter in which the manufacturer sells its 60,000th vehicle, you may claim the full credit until the end of the very next calendar quarter. For the second and third quarters after that quarter, you may only claim 50% of the credit. Only 25% of the credit can be claimed during the fourth and fifth quarters. However, no credit is allowed after the fifth quarter.