Ever since 2005, the IRS has been giving a tax credit to individual taxpayers who drive cars which use alternative fuel sources. There was at one time just a clean fuel burning deduction available to green minded taxpayers, but this only applied to gas-electric hybrid vehicles. In 2005, however, this was replaced by the current legislation, the Energy Policy Act.
By the terms of this 2005 law, the tax credit is taken directly from the total amount of tax which the taxpayer would otherwise owe. This reduces or can even eliminate the tax which the individual in question must pay. If you are unsure whether or not your particular “green” vehicle qualifies for this credit, you can ask your car manufacturer or your local dealership.
If you have bought a hybrid vehicle after January 1 2006, then your vehicle (and you, happily!) qualify for this tax credit. This tax credit will also apply to your vehicle if you have begun to use your car after this date. Read the rest of this entry »