U.S. Department of Energy - Energy Efficiency and Renewable Energy
Vehicle Technologies Program
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 
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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