Fact #304: January 26, 2004
Hybrid Vehicle Purchases Earn Federal Tax Deductions
Purchasers of hybrid electric vehicles (HEVs), such as the Honda Insight, Honda Civic Hybrid, and Toyota Prius, earn a federal tax deduction. Though the deduction is a fixed dollar amount for a given year, the actual value of this deduction varies depending on the purchaser's tax bracket. The deduction was calculated to be worth $500 if you purchased a HEV in 2003 and you are in the 25% tax bracket. The deduction for the purchase of a HEV in 2004 is lower than the previous year.
Value of the Federal Tax Deduction for
Purchasing a Hybrid Electric Vehicle
Purchasing a Hybrid Electric Vehicle
Supporting Information
| Tax Bracket | Year Vehicle Purchased | |
|---|---|---|
| 2003 | 2004 | |
| 10% | $200 | $150 |
| 15% | $300 | $225 |
| 25% | $500 | $375 |
| 28% | $560 | $420 |
| 33% | $660 | $495 |
| 35% | $700 | $525 |
|
Source: USA Today, "Going green with car can save you some green at tax time," January 13, 2003, p. 4B. | ||
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