Updated frequently — last updated Nov. 8, 2007 The Energy Policy Act of 2005 provides a credit for taxpayers who purchase certain energy efficient vehicles, including Qualified Hybrid vehicles.¹ Notice 2006-9 PDF provides procedures for manufacturers to certify to the Internal Revenue Service that certain passenger autos and light trucks qualify for the credit and the amount of the credit.² The credit amount for qualified hybrid vehicles other than passenger autos or light trucks is computed using a different formula. Guidance regarding the credit for new qualified hybrid motor vehicles that are not passenger automobiles or light trucks will be provided in a separate notice. Generally, for a passenger car or light truck that is a qualified hybrid vehicle, a taxpayer may rely on the manufacturer’s certification that a specific make, model and model year vehicle qualifies for the credit and the amount of the credit for which it qualifies.³ Even though a manufacturer has certified a vehicle, a taxpayer must meet the following requirements to qualify for the credit: The vehicle must be placed in service after 12-31-05 and purchased on or before 12-31-10. The original use of the vehicle must begin with the taxpayer claiming the credit. a. The credit may only be claimed by the original owner of a new, qualifying, hybrid vehicle and does not apply to a used hybrid vehicle. The vehicle must be acquired for use or lease by the taxpayer claiming the credit. a. The credit is only available to the original purchaser of a qualifying hybrid vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit. b. For qualifying vehicles used by a tax-exempt entity, the person who sold the qualifying vehicle to the person or entity using the vehicle is eligible to claim the credit, but only if the seller clearly discloses in a document to the tax-exempt entity the amount of credit. The vehicle must be used predominantly within the United States. Credit Phase Out The new qualified hybrid motor vehicle credit begins to phase out in the second calendar quarter after the calendar quarter in which at least 60,000 of the manufacturer’s qualifying passenger automobiles and light trucks have been sold. Notice 2006-9 requires manufacturers that have received acknowledgement of its certification must submit to the Service a report of the number of qualified vehicles sold to a retail dealer during the calendar quarter. For this purpose, qualified vehicles are any passenger automobile or light truck that is a new advanced lean bury technology motor vehicle or a qualified hybrid motor vehicle. After review of the quarterly reports, the Service will issue an acknowledgement letter to the vehicle manufacturer stating whether purchasers many continue to rely on the certification. Notice 2006-78 PDF announced the credit phase out schedule for advanced lean burn technology vehicles and hybrid vehicles manufactured by Toyota Motor Sales USA, Inc. (Toyota and Lexus vehicles). For the period of 10-1-06 to 3-31-07, purchasers of qualifying vehicles are eligible for 50% of the allowable credit. For the period of 4-1-07 to 9-30-07, purchasers of qualifying vehicles are eligible for 25% of the allowable credit. The table below includes both the full credit and the reduced credit amount depending upon when the vehicle was purchased. The date of purchase determines the amount of the credit available for a vehicle, i.e. whether a vehicle is eligible for the full credit or whether a portion of the credit is phased-out. The placed in service date determines the taxable year in which the credit may be claimed. For example, if consumer A purchases a Prius on Sept. 30, 2006, and takes possession in February 2007, consumer A can claim the full credit for 2007, the year in which the vehicle is placed in service. On the other hand, if consumer B purchases a Prius on Oct. 1, 2006, and takes possession of the vehicle in February 2007, Consumer B can claim 50% of the credit in 2007, the year in which the vehicle is placed in service. Eligible Vehicles As of Dec. 14, 2006, the Internal Revenue Service had acknowledged the manufacturers’ certifications of the following qualified hybrid vehicles (arranged by model year) and credit amounts (additional vehicles may subsequently be acknowledged. Further acknowledgements will be included in a revised summary page): * Effective 10-1-06, Toyota and Lexus vehicles qualify for reduced credit amounts. 2008 Make Model Credit Amount News Release # Ford Escape Hybrid 2WD $3,000 IR 2007-22, Jan. 31, 2007 Ford Escape Hybrid 4WD $2,220 IR 2007-22, Jan. 31, 2007 Mercury Mariner Hybrid 2 WD $3,000 IR 2007-22, Jan. 31, 2007 Mercury Mariner Hybrid 4WD $2,200 IR 2007-22, Jan. 31, 2007 2007 Make Model Credit Amount News Release # Chevrolet Silverado 2WD Hybrid Pickup Truck $ 250 IR-2006-108, July 11, 2006 Chevrolet Silverado 4WD Hybrid Pickup Truck $ 650 IR-2006-108, July 11, 2006 Ford Escape Hybrid 2WD $2,600 IR-2006-98, June 21, 2006 Ford Escape Hybrid 4WD $1,950 IR-2006-98, June 21, 2006 GMC Sierra 2WD Hybrid Pickup Truck $ 250 IR-2006-108, July 11, 2006 GMC Sierra 4WD Hybrid Pickup Truck $ 650 IR-2006-108, July 11, 2006 Honda Accord AT $1,300 IR 2006-183, Nov. 22, 2006 Honda Accord Navi $1,300 IR 2006-183, Nov. 22, 2006 Honda Civic CVT $2,100 IR 2006-183, Nov. 22, 2006 Lexus* GS450h Purchase Date IR-2006–67, April 25, 2006 1-1-06 / 9-30-06 $1,550 10-1-06 / 3-31-07 $ 775 4-1-07 / 9-30-07 $ 387.50 10-1-07 $ 0 Lexus * RX 400h 4WD Purchase Date IR-2006-154, Sept. 30, 2006 1-1-06 / 9-30-06 $2,200 10-1-06 / 3-31-07 $1,100 4-1-07 / 9-30-07 $ 550 10-1-07 $ 0 Lexus* RX 400h 2WD Purchase Date IR-2006-154, Sept. 30, 2006 1-1-06 / 9-30-06 $2,200 10-1-06 / 3-31-07 $1,100 4-1-07 / 9-30-07 $ 550 10-1-07 $ 0 Mercury Mariner Hybrid 4WD $1,950 IR-2006-98, June 21, 2006 Saturn Vue Green Line $ 650 IR-2006-110, July 11, 2006 Toyota* Camry Hybrid Purchase Date IR-2006–67, April 25, 2006 1-1-06 / 9-30-06 $2,600 10-1-06 / 3-31-07 $1,300 4-1-07 / 9-30-07 $ 650 10-1-07 $ 0 Toyota* Prius Purchase Date IR-2006-154, Sept. 30, 2006 1-1-06 / 9-30-06 $3,150 10-1-06 / 3-31-07 $1,575 4-1-07 /9-30-07 $ 787.50 10-1-07 $ 0 Toyota* Highlander Hybrid 2WD Purchase Date IR-2006-154, Sept. 30, 2006 1-1-06 / 9-30-06 $2,600 10-1-06 / 3-31-07 $1,300 4-1-07 / 9-30-07 $ 650 10-1-07 $ 0 Toyota* Highlander Hybrid 4WD Purchase Date IR-2006-154, Sept. 30, 2006 2006 Make Model Credit Amount News Release # Chevrolet Silverado 2WD Hybrid Pickup Truck $ 250 IR-2006-108, July 11. 2006 Chevrolet Silverado 4WD Hybrid Pickup Truck $ 650 IR-2006-108, July 11. 2006 Ford Escape Hybrid 2WD Front Wheel Drive $2,600 IR-2006-56, April 7, 2006 Ford Escape Hybrid 4WD $1,950 IR-2006-56, April 7, 2006 GMC Sierra 2WD Hybrid Pickup Truck $ 250 IR-2006-108, July 11, 2006 GMC Sierra 4WD Hybrid Pickup Truck $ 650 IR-2006-108, July 11, 2006 Honda Accord Hybrid AT w/updated calibration* $1,300 $ 650 - Vehicles without updated calibration IR-2006-86, June 1, 2006 Honda Accord Hybrid Navi AT w/updated calibration* $1,300 $ 650 - Vehicles without updated calibration IR-2006-86, June 1, 2006 Honda Civic Hybrid CVT $2,100 IR-2006-86, June 1, 2006 Honda Insight CVT $1,450 IR-2006-86, June 1, 2006 Lexus* RX400h 2WD Purchase Date IR-2006-57, April 7, 2006 1-1-06 / 9-30-06 $2,200 10-1-06 / 3-31-07 $1,100 4-1-07 / 9-30-07 $ 550 10-1-07 $ 0 Lexus* RX400h 4WD Purchase Date IR-2006-57, April 7, 2006 1-1-06 / 9-30-06 $2,200 10-1-06 / 3-31-07 $1,100 4-1-07 / 9-30-07 $ 550 10-1-07 $ 0 Mercury Mariner 4WD Hybrid $1,950 IR-2006-56, April 7, 2006 Toyota* Highlander 2 WD Hybrid Purchase Date IR-2006-57, April 7, 2006 1-1-06 / 9-30-06 $2,600 10-1-06 / 3-31-07 $1,300 4-1-07 / 9-30-07 $ 650 10-1-07 $ 0 Toyota* Highlander 4WD Hybrid Purchase Date IR-2006-57, April 7, 2006 1-1-06 / 9-30-06 $2,600 10-1-06 / 3-31-07 $1,300 4-1-07 / 9-30-07 $ 650 10-1-07 $ 0 Toyota* Prius Purchase Date IR-2006-57, April 7, 2006 1-1-06 / 9-30-06 $3,150 10-1-06 / 3-31-07 $1,575 4-1-07 / 9-30-07 $ 787.50 10-1-07 $ 0 2005 Make Model Credit Amount News Release # Ford Escape HEV 2WD $2,600 IR-2006-165, Oct. 20, 2006 Ford Escape HEV 4WD $1,950 IR-2006-165, Oct. 20, 2006 Honda Accord Hybrid AT $ 650 IR-2006-86, June 1, 2006 Honda Accord Hybrid Navi AT $ 650 IR-2006-86, June 1, 2006 Honda Civic Hybrid CVT $1,700 IR-2006-86, June 1, 2006 Honda Civic Hyrid MT $1,700 IR-2006-86, June 1, 2006 Honda Insight CVT $1,450 IR-2006-86, June 1, 2006 Toyota* Prius Purchase Date IR-2006-57, April 7, 2006 1-1-06 / 9-30-06 $3,150 10-1-06 / 3-31-07 $1,575 4-1-07 / 9-30-07 $ 787.50 10-1-07 $ 0 Form 8910 PDF, Alternative Motor Vehicle Credit, is used to claim the qualified hybrid vehicle credit as well as for vehicles qualifying for other provisions of the alternative motor vehicle credit. If the qualifying hybrid vehicle is purchased for business use, the credit for the business use of a qualifying hybrid vehicle is reported on Form 3800 PDF, General Business Credit. For qualifying hybrid vehicles acquired for personal use, the credit is reported on the appropriate line of the taxpayer’s Form 1040 PDF, U.S. Individual Income Tax Return. For additional information on the proper reporting of the alternative motor vehicle credit, see the instructions to Form 8910 on page two of the form. ¹ IRC §30B potentially allows a credit for four separate categories of vehicles: 1) Fuel Cell vehicles, 2) Advanced Lean Burn Technology vehicles, 3) Hybrid vehicles and 4) Alternative Fuel vehicles. ² The deduction allowable for certain hybrid vehicles under IRC §179A is no longer available for vehicles placed in service after December 31, 2005. ³ If the Internal Revenue Service publishes an announcement that the certification for any specific vehicle has been withdrawn, taxpayers cannot rely on the certification for such a vehicle purchased after the date of publication of the withdrawal announcement. Subscribe to IRS Newswire
