Hybrid and Alternative Fuel Tax Credits – Available Now!

Saving money is the number one priority for everyone – except maybe if you’re rich. The truth is most people are not rich. Oh, what a perfect world that would be if it were true. Being loaded is nice but having no debt and a healthy savings is more attainable though still difficult. When it comes to your cutting costs, upgrading your vehicle and alternative fuel resources could help.

Though in the beginning it can seem costly, the upgrades in the long run pay off – not just for you but for the environment as well.

There are several incentives offered by the federal government available in the U.S. of which you can take advantage. These incentives can go some ways to ease your transition to using alternative fuels. For the most part, these incentives come in the form of tax credits. This is better than a deduction because you are actually reducing the amount of net tax you have to pay. This could mean a greater amount of savings for you. It’s always good to go to your accountant for the most up to date tax advice.

Tax credits will depend largely on the vehicle and fuel type you choose.

Tax Credits for Alternative Motor Vehicles

If you bought a new alternative fuel vehicle and had it serviced after January 1st of 2006 you may be eligible for this credit. The credit itself is equal to 50% of the cost of the incremental cost vehicle. In addition to that, you are eligible for another 30% of the incremental cost for vehicles with near-zero emissions.

To a certain degree, the tax credits are based on the gross vehicle’s weight. The gross vehicle weight rating (GVWR) refers to the maximum allowable and total weight of a car, truck or trailer when loaded. The figures below are an approximate:

8,500 lbs GVWR or less: $5,000:
8,501 lbs to 14,000 GVWR: $10,000
14,001 lbs to 26,000 GVWR: $25,000
26,001 lbs GVWR and more: $40,000

In order to claim your tax credit, you need to fill out an IRS form which can be downloaded (IRS Form 8910). This replaces the Clean Fuel Vehicle Property Tax Deduction legislation established in previous years. All rules regarding vehicle conversion can be downloaded from the internet. The IRS certifies vehicles for tax credit so be sure to visit their site.

Tax Credits for Hybrid Vehicles

This is a two part tax credit: the fuel economy part ($400 to $2,400) and the conservation portion ($250 to $1,000). Light-duty hybrid vehicles (less than 8,501 GVWR) can qualify for this credit. The credit is based upon improved fuel economy and fuel savings potential gained over the life of the vehicle. For more information go straight to www.irs.gov and navigate with the search field. You’ll get tons of information.

Tax Credits for Clean Diesel Fuel Cars

This tax credit is offered to car owners who purchase models that qualify as an Advanced Lean Burn Technology Motor vehicle. Visit the IRS site for more on vehicle that are in this category.

Fuel Cell Motor Vehicle Credit

Light-duty fuel cell vehicles can receive a base tax credit of $8,000 available until December 31st, 2009. After this date, the credit will be reduced to $4,000. More tax credits are offered for medium and heavy-duty fuel cell vehicles with credits offered through December 31st, 2014.

Tax Credit for Electric Vehicles

Overall, the credit equals 10% of the cost of the vehicle up to $4,000. Stipulations require that the vehicle be powered primarily by the electric motor. Most of the power required to operate the vehicle power must be drawn from electric batteries. Check with your accountant to see if this credit is practical for you. If your vehicle is recharging while being used in a business or trade, one could even qualify for a tax deduction. Though this is not a credit, the deduction could be up to $100,000 per location. Be sure to visit the IRS site for more information.

Tax Credit For Alternative-Fuel Infrastructure

This credit can be as much as $30,000 and is normally reserved for businesses. However, it is also available to buyers of residential refueling equipment but the credit would only be up to $1,000. The credit is effective on equipment and has been serviced after December 31st, 2005. It expires December 31st, 2009. The hydrogen tax credit associated with this expires in 2014.

You can download the IRS Form 8911 to receive the tax credits. Go to the IRS website to download.

The IRS website is relatively easy to navigate. You will also find more information on a variety of categories related to tax credits for your vehicle. You can also get information on structural guidelines and detailed description to see if your particular model qualifies for a certain tax credit. You won’t be rich but at least you’ll keep a few extra dollars in your pocket.

Alternative fuel and new car technology is really the wave of the future. Enhancements and improvements in both areas have been steady and they will continue to improve. Alternative fuel in most cases tends to be cheaper than regular gas. Reusable sources of power such as solar power show possibilities for the future though much more advancement in this area is still necessary.

Upgrading your vehicle, modifying it if possible including adjusting your driving habits and choosing alternative fuels can not only help the environment but can become self-rewarding.

Source: http://www.jerseycarcash.com