Hybrid cars have become increasingly popular over the years, thanks to their fuel efficiency and lower emissions. Not only do they help the environment, but they also help you save money in the long run.
One of the biggest advantages of buying a hybrid car is the tax incentives that come with it.
In this guide, we'll discuss everything you need to know about tax incentives for buying a hybrid car and how much you can save.
What Are Tax Incentives for Hybrid Cars?
Tax incentives are benefits offered by the government to encourage consumers to make eco-friendly choices.
The government provides tax credits to incentivize the purchase of hybrid vehicles. The amount of the tax credit varies based on the vehicle's battery capacity and the manufacturer.
In general, the tax credit can range from $2,500 to $7,500.
Who Qualifies for Tax Incentives for Hybrid Cars?
To qualify for tax incentives, you must purchase a new hybrid car or plug-in electric vehicle (EV) with a battery capacity of at least 4 kWh.
The car must be purchased in the tax year in which you are claiming the credit. Also, the car must be used primarily for personal use, not for commercial purposes.
How Much Can You Save with Tax Incentives for Hybrid Cars?
The amount you can save with tax incentives for hybrid cars varies based on the vehicle's battery capacity and manufacturer. Generally, you can save between $2,500 to $7,500 in tax credits. Here's a breakdown of the maximum tax credits for the most popular hybrid cars on the market:
Toyota Prius Prime - $4,502
Honda Clarity Plug-In Hybrid - $7,500
Chevrolet Volt - $7,500
Kia Niro Plug-In Hybrid - $4,543
Ford Fusion Energi - $4,609
How to Claim Tax Incentives for Hybrid Cars?
To claim the tax incentives for buying a hybrid car, you must file Form 8936, which is the Qualified Plug-In Electric Drive Motor Vehicle Credit.
You can also use tax preparation software to claim the credit or consult with a tax professional. Make sure to keep all your receipts and documentation related to the purchase of your hybrid car.
When Do Tax Incentives for Hybrid Cars Expire?
The tax incentives for buying a hybrid car are limited to a certain number of vehicles per manufacturer.
Once the manufacturer has sold a certain number of qualified vehicles, the tax incentives begin to phase out.
Some manufacturers, such as Tesla and General Motors, have already reached their maximum limit for tax incentives.
What Are Other Benefits of Owning a Hybrid Car?
In addition to tax incentives, there are several other benefits to owning a hybrid car. They include:
Fuel efficiency:
These cars get better gas mileage than traditional gasoline-powered vehicles, which saves you money on fuel costs.Lower emissions:
These cars produce fewer emissions than traditional vehicles, which is better for the environment.Longer lifespan:
These cars have a longer lifespan than traditional vehicles, which means you won't have to replace them as often.Better resale value:
These cars hold their value better than traditional vehicles, which means you can sell them for a higher price.