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Federal State Purchasing Incentives
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Since their introduction in 2000, hybrid vehicles have made an amazing shift from eco-oddball to mainstream car. Any single buyer might take the hybrid plunge for one particular reason, several reasons, or all the following reasons: squeaky clean emissions, champion fuel economy, reducing use of imported oil, or the allure of cool new technology. It's the Chinese menu "something for everybody" approach to green car buying. Thanks to a host of local, regional, and federal hybrid incentives and perks—from tax credits to preferred parking—the hybrid menu is becoming even more enticing and accessible.
Federal Tax Credits
Hybrid car tax credits have been in place since the beginning of 2006. The list of vehicles qualifying for an "Alternative Motor Vehicle Credit" now includes a number of "Advanced Lean Burn Technology Vehicles," otherwise known as clean diesels. The exact amount of your credit may vary—so please consult a tax professional.
Note: Credits are no longer available for Toyota and Honda hybrids. Ford hybrids are still eligible, but the credits will be cut in half (from amounts listed below) starting April 1, 2009. In October 2009, the credits will be cut in half again, and will completely phase out on April 1, 2010.
| Current Models | ||
| Make | Model | Tax Credit |
BMW | 335d (Clean Diesel) | $900 |
BMW | X5 xDrive35d (Clean Diesel) | $1,800 |
Chevrolet | Malibu Hybrid | $1,300 |
Chevrolet | Silverado Hybrid | $2,200 |
Chevrolet | Tahoe Hybrid | $2,200 |
Ford | Escape Hybrid (2wd) | $3,000* |
Ford | Escape Hybrid (4wd) | $2,200* |
Ford | Fusion Hybrid | $3,400* |
GMC | Sierra Hybrid | $2,200 |
GMC | Yukon Hybrid | $2,200 |
Mazda | Tribute Hybrid (2wd) | $3,000 |
Mercedes | GL 320 Bluetec (Clean Diesel) | $1,800 |
Mercedes | R320 Bluetec (Clean Diesel) | $1,550 |
Mercedes | ML 320 Bluetec (Clean Diesel) | $900 |
Mazda | Tribute Hybrid (4wd) | $2,200 |
Mercury | Mariner Hybrid (2wd) | $3,000* |
Mercury | Mariner Hybrid (4wd) | $2,200* |
Mercury | Milan Hybrid | $3,400* |
Nissan | Altima Hybrid | $2,350 |
Saturn | Vue Green Line | $650 |
Saturn | Aura Green Line | $1,300 |
Volkswagen | Jetta TDI (Clean Diesel) | $1,300 |
The basic rules:
- The vehicle must be placed in service before 12/31/10.
- The original use of the vehicle must begin with the taxpayer claiming the credit. 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. 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. 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.
- The credit amount is based on the purchase date of the vehicle.
- The new law for the hybrid tax credit might require taxpayers to recapture their hybrid tax credit if they re-sell their hybrid car or truck.
Important considerations related to the Alternative Minimum Tax:
- The hybrid tax credit will not reduce your alternative minimum tax, if that applies to you. As stated in Toyota's statement about tax credits: "The benefit of the hybrid vehicle tax credit will also be substantially reduced or eliminated if the individual purchaser is subject to the federal alternative minimum tax."
- The credit will reduce your regular income tax liability, but not below zero.
- If you are eligible for multiple tax credits, the hybrid tax credit is taken last after all the other credits (e.g., child care tax credit, mortgage credit, retirement savings credit) have been taken. Any tax liability left over by these reductions will be the maximum dollar limit of your hybrid tax credit. If your hybrid tax credit exceeds your maximum dollar limit, the excess is not refundable, and is lost forever.
- The excess cannot be carried over to another year, or given away to another person.
News :The $787 billion economic stimulus package—also known as The American Recovery and Reinvestment Act of 2009—was signed into law in February 2009. The Act provides an array of tax incentives for purchasing plug-in hybrid and electric vehicles. The most immediate benefit is a $2,500 tax credit for buying a neighborhood electric vehicle—the small electric cars most commonly used in retirement communities. The exact amount of credits for plug-in hybrids will be determined sometime in 2009. There's plenty of time; the first plug-in cars are not expected to reach the market until late 2010.
Regional, State & Local Incentives
Local perks to hybrid buyers—little freebies like free municipal parking—aren't likely to sway a car shopper one way or the other. But since the perks are available, you might as well take advantage of them. Whether you think these incentives represent sound transportation policy, or just cheap moves to curry favor with voters, more incentives for hybrids and other automotive alternatives are going to keep coming down the pike.
It's not easy keeping track of the latest incentives and rebates across the country—so please verify exact current rulings with appropriate state or city officials.
| Arizona | On Feb. 9, 2007, the Arizona Department of Transportation announced that three hybrid models—the Honda Insight, Honda Civic Hybrid, and Toyota Prius—are now permitted to use car pool lanes on freeways in Arizona. The decision cleared the way for the estimated 9,000 Toyota Prius, Honda Insight and Honda Civic Hybrid vehicles in Arizona to use the carpool lanes, regardless of the number of passengers. |
| California | The State of California is no longer issuing decals to hybrid drivers for use in high occupancy vehicle (HOV) lanes. Hybrid Car owners who have purchased their hybrids from San Jose dealers are exempt from local parking fees. For eligibility, contact Jason Burton (408) 794-1427, jason.burton@ci.sj.ca.us. On February 10, 2009, the Los Angeles City Council voted to end the free metered parking program for alternative fuel vehicles begun in 2002. The City of Los Angeles Department of Transportation (LADOT) will begin citing alternative fuel vehicles parked at expired parking meters starting March 1, 2009. For more details, go to http://ladot.lacity.org/tf_Clean_Air_Vehicles.htm If your vehicle has the decal affixed to your alternative fuel, hybrid or electric vehicle, the Santa Monica Municipal Code (3.16.120) allows you to park in any metered parking space in the city without charge for the maximum amount of time allowed by that meter. In other words, if you're at a two-hour meter, you can park there free for two hours, but beyond that, you're subject to ticketing for overstaying your welcome. Clean Air Vehicle decals are issued by the state. The Port of San Diego has designated two parking spaces next to its main office on Pacific Highway for exclusive use by hybrid vehicles. |
| Colorado | The Colorado Department of Revenue offers a tax credit for the purchase of a hybrid electric vehicle (HEV), up to $4,713.00. For more information, including tax credit amounts, visit http://www.revenue.state.co.us/fyi/html/income09.html. Some hybrid vehicles are exempt from emissions testing. For questions, contact your county motor vehicle office. Hybrid vehicles registered in the city of Aspen are eligible for a $100.00 rebate on license registration is allowed to park with impunity in the city's residential and carpool zones. Owners must register the vehicle with the Parking Department. |
| Connecticut | On June 6, 2005, the city of New Haven passed a law permitting hybrid vehicles registered in New Haven free parking at metered spots within the city. The ordinance will take effect within one month and only apply to alternative fuel vehicles registered in New Haven. Owners will have to come to City Hall to receive a decal which will be attached the to vehicle. Motorists will still need to obey posted time limits and must park in legal spots. For more information contact DSlap@Newhavenct.net. |
| District of Columbia | The DMV Reform Amendment Act Of 2004 went into effect on April 15, 2005. It exempts owners of hybrids and other alternative fuel vehicles from excise tax and reduces vehicle registration charges. For more information, contact Elizabeth.Berry@dc.gov or Corey.Buffo@dc.gov. |
| Florida | Low-emission and hybrid vehicles may be driven in high occupancy vehicle (HOV) lanes at any time regardless of vehicle occupancy. Hybrid vehicles that are certified and labeled in accordance with federal regulations may be driven in HOV lanes at any time, regardless of the number of passengers in the vehicle. The vehicle must have a decal issued by the Florida Division of Motor Vehicles, obtained for a $5 fee, which must be renewed annually. For more information, please contact the Florida Division of Motor Vehicles at dmv@hsmv.state.fl.us or (850) 922-9000. (Reference Florida Statutes 316.0741). On January 16, 2008, the City of Parkland, in North Broward, adopted the Energy Incentive Reward Program which provides a $200 one-time payment to Parkland residents who purchase a hybrid car. For the payment application, visit: |
| Illinois | The City of Wilmette raised its vehicle sticker fee to $75, providing a discount only to vehicles that meet the EPA's SmartWay or SmartWay Elite criteria. Only two models sold in Illinois, the Honda Civic Hybrid and Honda Civic GX NGV, qualify for the SmartWay Elite designation and reduced fee ($25), though more cars qualify for the Smart Way designation and reduced fee ($50). In November 2006, the Frankfort Village Board voted to waive the $5 registration sticker fee for hybrid vehicles. |
| Louisiana | The Louisiana Department of Natural Resources offers a state income tax credit worth 20 percent of the cost of converting a vehicle to operate on an alternative fuel, and 20 percent of the incremental cost of purchasing a new alternative fuel vehicle (AFV). For the purchase of an AFV, the tax credit cannot exceed the lesser of 2 percent of the total cost of the vehicle or $1,500. Only those vehicles registered in Louisiana can receive the tax credit. |
| Maine | Maine's partial sales tax for hybrids expired on January 1, 2006. |
| Maryland | H.B. 61 exempts qualified hybrid electric vehicles from motor vehicle emissions testing requirements. Owners of hybrid cars will get discounts on parking at the 15 city-owned parking garages in Baltimore. The plan cuts between $32 and $85 from the monthly fees for owners of the fuel-efficient vehicles. Baltimore will limit participation to 200 vehicles and the program will apply only to monthly, contract parking. Drivers of the three most fuel-efficient models can apply for a decal that will let them park in designated spots in the city's garages. |
| Michigan | The city council of Ferndale passed an ordinance that allows free parking at city meters for drivers of hybrids and other vehicles that average 30 miles per gallon or more in city driving. Owners of eligible automobiles must register and pay an annual fee in order to get a permit for the exemption. The exemption began September 2006 and was renewed in October 2007. To find out if your car qualifies, call the City Assessor at (248) 546-2372 from 8 a.m. to 5 p.m. weekdays. |
| Montana | The new Bozeman Public Library has reserved some of its prime parking spaces for hybrid and carpool vehicles. The library is seeking Leadership in Energy and Environmental Design (LEED) certification for its new building, which has incorporated other sustainable building design and construction concepts. |
| New Jersey | On May 4, 2006, the New Jersey Turnpike Authority, which administers the turnpike and the Garden State Parkway, voted to allow hybrid vehicles to use the high occupancy vehicles lanes on the turnpike. The ruling's effect may be limited since the turnpike, which sees an average of 700,000 drivers daily, has HOV lanes only between Interchange 11 in Woodbridge and Interchange 14 in Newark going both northbound and southbound. The Garden State Parkway does not have car pool lanes. Decals are not required. Turnpike Authority officials said state police do not anticipate any problems identifying which cars are hybrids. For a list of qualifying vehicles, visit http://www.state.nj.us/turnpike/nj-list-of-Eligible-Vehicles.htm. |
| New Mexico | Hybrid electric vehicles with a U.S. Environmental Protection Agency (EPA) fuel economy rating of at least 27.5 miles per gallon are eligible for a one-time exemption from the motor vehicle excise tax and state sales tax. In Albuquerque, hybrid cars are exempt from parking meter fees. For more information, visit: http://www.cabq.gov/parking/green-vehicle-parking-registration. Or call The City of Albuquerque's parking office at 505-924-3950. |
| New York | Clean Pass is a program allowing eligible low-emission, energy-efficient vehicles to use the 40-mile Long Island Expressway High Occupancy Vehicle (LIE/HOV). Clean Pass is a multi-agency pilot program partnering three New York State agencies, the State Department of Transportation (NYSDOT), the State Department of Motor Vehicles (DMV), and State Department of Environmental Conservation (DEC). Applications will be taken over the phone, by calling the State Department of Motor Vehicles toll free (800) 697-0558. In Westchester, starting in January 2006, hybrid vehicle owners will be allowed to park for free at two county-owned commuter lots. The cost of a monthly permit is usually $75.00. The county has about 1,100 commuter spaces available at two lots—about 200 of them on Central Avenue in White Plains at the Westchester County Center and the other 900 on Fisher Avenue in North White Plains, near the train station. For more information, contact County Legislator Martin Rogowski at mlr1@westchestergov.com. Starting Jan. 1, 2006, the Town of Huntington will allow hybrids and alternative-fuel vehicles, affixed with special "Keep Huntington Green" window stickers, free parking at town meters, free access to all Huntington beaches, and free commuter parking at any of the town's four Long Island Rail Road stations. |
| Oregon | A Residential Tax Credit of up to $1,500 is available for the purchase of a HEV or dual-fuel vehicle. For more information, contact Deby Davis of the Oregon Department of Energy at (503) 378-8351, via email at deby.s.davis@state.or.us. You can also find detailed information about qualifying vehicles at: http://egov.oregon.gov/ENERGY/TRANS/hybridcr.shtml. A Business Energy Tax Credit is available for the purchase of hybrid electric vehicles and dual-fuel vehicles, the cost of converting vehicles to operate on an alternative fuel, and the cost of constructing alternative fuel refueling stations. The tax credit is 35 percent of the incremental cost of the system or equipment and is taken over five years. |
| Pennsylvania | Pennsylvania's Department of Environmental Protection will offer an opportunity to Commonwealth residents to apply for a rebate to assist with the incremental cost for the purchase of a new hybrid, bi-fuel, dual-fuel or dedicated alternative fuel vehicle. The rebate amount is $500. The rebate will be offered as long as funds are available. Rebates will be offered on a "first come, first served" basis. Rebate applications shall be submitted no later than six months after the purchase. For more information and forms, call 866-294-3854 or in the Harrisburg Area, call 717-214-3492. |
| South Carolina | Consumers buying hybrid vehicles are provided a state tax credit equal to 20 percent of the federal tax credit scheduled to begin in tax year 2006. The state tax credit amount is calculated without regard to the phase-out period limits of Internal Revenue Code. The credit was signed into law on June 1, 2006. The Energy Freedom and Rural Development Act provides a sales tax rebate for the purchase or lease of fuel efficient vehicles beginning June 30, 2008 and ending June 30, 2013. It provides $300 for the in-state purchase of a hybrid vehicle, an electric vehicle, a plug-in hybrid vehicle, flex-fuel vehicle (FFV) capable of operating on E85, or a vehicle with an EPA city fuel economy rating of 30 mpg or higher. Up to $500 is allowed for the purchase of equipment for conversion of a conventional hybrid electric vehicle to a plug-in hybrid electric vehicle. For taxable years 2007-2010, it allows a $2,000 tax credit against the income tax imposed for the in-state purchase or lease of a plug-in hybrid vehicle. The final bill was vetoed by the governor but overridden by the legislature on June 19, 2007. |
| Tennessee | SB2716/HB2794 authorizes single-occupant use of HOV lanes for low-emission energy-efficient vehicles in HOV lanes. The TDOT will issue decals for qualifying vehicles and study how the authorization affects the HOV lanes. The law went into effect on Jan. 1, 2009. |
| Texas | The City of Austin's "Drive Clean, Park Free" program gives city-registered owners of hybrid vehicles that receive an EPA air pollution score of 8 or better a $100 pre-paid parking cards to park in any of the city's 3,700 parking meters. Owners must submit an application to the city and receive a bumper sticker showing their participation in the program. Eligible vehicles must be purchased at certified dealerships within the Austin City Limits. For more information go to http://www.ci.austin.tx.us/airquality/parkfree.htm. The City of San Antonio allows owners of hybrid vehicles to park for free at street parking meters. A City ordinance, which took effect immediately after City Council approval on May 4, 2006, requires all owners wishing to take advantage of the one-year pilot program to register their hybrid vehicles with the City's Parking Division located at 243 N. Center Street. Registered hybrid vehicle owners can park at any of the City's 2,010 street parking meters without charge, including the pilot Pay & Display locations. All drivers must follow street parking meter rules such as parking for only the time allotted at the respective meter. For more information, call (210) 207-8266. |
| Utah | Vehicles with clean fuel group license plates are authorized to travel in HOV lanes regardless of the number of occupants. The clean fuel plate may be purchased for $15 from any Motor Vehicle Division office by presenting a clean special fuel certificate. This incentive expires December 31, 2010, as extended by 2005 House Bill 96. For more information, please contact the Utah State Tax Commission's Motor Vehicle Division at (800) DMV-UTAH or (801) 297-7780, or visit: http://dmv.utah.gov/licensespecialplates.html. The state's tax credit for "electric-hybrid" is no longer active. Salt Lake City grants free metered parking to vehicles powered solely by an alternative fuel (i.e. propane, compressed natural gas, or electricity) or that are "top performers" in regards to city fuel economy or emissions. All available hybrids qualify. For details, including information about "Green Vehicle" parking permits, visit: http://www.slcgov.com/transportation/parking/green.htm. |
| Washington | From Jan. 1, 2009 to Jan. 1, 2001, the state use tax and retail sales tax do not apply to sales of new passenger cars, light duty trucks, and medium duty passenger vehicles, which utilize hybrid technology and have an EPA-estimated highway gasoline mileage rating of at least 40 miles per gallon. Electric, CNG, and LPG vehicles are exempt from emission control inspections. Effective June 13, 2002, hybrid motor vehicles that obtain a rating by the U.S. Environmental Protection Agency of at least 50 miles per gallon of gas during city driving are also exempt from these inspections. |
