U.S. Department of Energy - Energy Efficiency and Renewable Energy
EERE Financial Opportunities
Phase-out of Tax Credits for Toyota Hybrids Starts October 1st
September 27, 2006
Buyers of hybrid vehicles carrying the Toyota or Lexus brand will earn
a lower tax credit as of October 1st. The U.S. Internal Revenue
Service (IRS) announced on September 20th that Toyota Motor Corporation had
sold more than 60,000 hybrid vehicles as of the second quarter of
2006. As required by the Energy Policy Act of 2005, the IRS is cutting
the tax credit by 50 percent for the fourth quarter of 2006, which
starts October 1st, through the first quarter of 2007. For the two
quarters after that, which run from April 1st, 2007, through September
30th, 2007, the tax credit will again be cut in half, and a year from
now the tax credit will disappear. For instance, buyers of the popular
Prius can earn a tax credit of at most $1,575 as of October 1st, and
on April 1st, 2007, that figure will drop to just $787. Meanwhile, tax
credits remain in full force for other automakers producing hybrids.
IRS press release
and official notice
(PDF 17 KB) on
the Toyota tax credit phase-out, and for information about other
hybrids, see the special IRS Web page for hybrid and alternative fuel vehicles.
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