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June 12, 2005

Comprehensive Guide to Hybrid Vehicle Incentives -- Save Cash While Saving Gas

For a state-by-state list of incentives available to buyers of hybrid vehicles, I haven't seen anything better than this list at the Union of Concerned Scientist's website.

As far as the federal tax deduction is concerned, unless legislators change the rule, you only have the rest of this year to deduct $2,000 off your taxes -- in 2006 it goes down to $500.

As far as state incentives, it appears Colorado and New York residents get some of the best deals. Colorado offers full tax credits of about $2,700 to $4,700 for hybrid vehicle buyers. New Yorkers get up to a $3,000 credit. Credits, remember, are deducted right off the top of your final bill, as opposed to deductions which are taken off the income line.

Two observations: First, domestic car companies could advance a legit beef that tax programs amount to de facto government support of foreign automakers. It doesn't matter that they came to the market first, what matters is that the government is helping "foreign" companies gain a foothold. I don't necessarily agree with the logic, but it occurred to me that this is quite possible, let's say, around the time certain car makers go to the government asking for bailouts and/or assistance.

Second, I'm not a big fan of the Union of Concerned Scientists. While some of their stuff appears solid, their name is thoroughly deceptive. UCS is an environmental lobby group, first and last. The scientist part, while brilliant marketing, is misleading.

I particularly disagree with their opposition to diesel tax credits. Going by the same logic they use on their hybrid support site, granting tax credits to diesel means people will be encouraged to buy technology that gets, on average, 25 to 40% more use out of petroleum based fuel. The argument that diesel is more polluting has some merit, but without incentives, the technology could disappear, meaning that any potential advances in pollution reduction would never be realized.

Posted by Frank at June 12, 2005 5:36 PM | Filed under Alternative Fuels | Auto News | Diesel | Hybrid

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