Toyota and Lexus Hybrid Car Tax Credits End : Lexus new car review 2008,

Toyota and Lexus Hybrid Car Tax Credits End
by Aazdak Alisimo
Toyota certain carries the banner when it comes to hybrid car sales. One has to wonder if it will continue now the Toyota and Lexus hybrids have lost all tax credits associated with their purchases.
The Prius. If ever there has been a successful car launch, this is it. How popular is the odd little hybrid? Most people think it was the first hybrid launched to the mass market. In truth, Honda had hybrids out long before Toyota, but the Prius just stomped them in the market.
Toyota and the entire hybrid vehicle market has also benefited heavily from a form of federal subsidiary. The federal government has a stated goal of weaning us off of our oil addiction. Obviously, hybrid cars represent a step in the right direction. To financially motivate people to buy hybrids, the government issues a large tax credit to people who purchased new ones.
So, is the hybrid tax credit a big deal? Oh, yes. It represents a dollar for dollar reduction of the tax owed on your personal returns. It is not a deduction that reduces your gross income before determining your tax due. Instead, it actually is subtracted from the tax. If you determine you owe the IRS $5,000 and purchased a hybrid with a tax credit of $2,500, you end up owing the IRS $2,500. Alas, the hybrid tax credit is a stepped event.
The government's goal is to get the public interested in hybrid cars. It is not to give the hybrid manufacturers a free ride forever. As a result, the hybrid tax credit for each manufacture is phased out over time. The phase out is based on the number of cars sold.
Toyota and its subsidiary Lexus have just hit the sales cap for the hybrid tax credit. Specifically, the tax credit was terminated once 60,000 total hybrids were sold by the two brands. Well, it happened.
As of October 1, 2007, individuals buying any Toyota or Lexus hybrid will no longer receive a tax credit. None. Nada. Zippo. That being said, both brands offer excellent cars that should be attractive to buyers regardless of whether there is a tax credit or not. If you really want that tax credit, you can look to other brands that still qualify for them.