Details, Details | Green Energy News

August 7, 2005 – Vol.10 No.20

DETAILS, DETAILS.

If you’re a U.S. taxpayer and planning to buy a hybrid or fuel efficient diesel car or light truck soon, you might want to see a tax accountant first. The tax credits for the fuel efficient vehicles available beginning in 2006 are a little complex, to say the least.

The American Council for an Energy Efficient Economy (ACEEE) has published a chart of their best-guess estimates of the tax credits that will be applicable to 30 different vehicles expected to be available for the 2006 model year.

Again, ACEEE has made BEST GUESS ESTIMATES. The advocacy group says the estimates are only to give a sense of the magnitude of the upcoming credits.

The tax credits are in two parts. First there is a credit based on a particular vehicle’s city fuel economy relative to the average for its weight class. The vehicle in question must also meet a moderately stringent air pollution standard for the credit.

Then, there is an additional credit for vehicles that save at least 1200 gallons of fuel over their lifetime relative to their class average.

Further, the credits have a cut-off point and begin to phase out after a manufacturer has sold 60,000 units of a particular model.

Here are a few of their findings based on 2005 model year data and announcements for 2006 models from manufacturers...

--- The estimated total credits range from $250 -$3150, though the maximum total possible under the law is $3400.

--- None of the diesel vehicles will be able to get any credit at the offset of the tax scheme because they won’t meet emission standards. This may change for the 2007 model year when low sulfur diesel fuel is available and manufacturers alter and improve emission controls to adapt to the cleaner fuel.

--- The Toyota Prius should get the highest credit. ACEEE estimates $3150.

--- Though it gets the highest city fuel economy - 61 miles per gallon - the manual transmission version of Honda’s Insight gets no credit whatsoever because it doesn’t meet emissions criteria.

Beyond the tax credits, consumers, perhaps with their accountants, have to consider the fuel cost savings based on the climbing cost of gasoline and diesel fuel. For the ACEEE’s tax credit estimates for current and upcoming models visit http://www.aceee.org/transportation/hybtaxcred.htm