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Deduction
for Hybrid Vehicles
You may be eligible to claim a one-time tax
deduction on your federal income tax return if you are the
original owner of a qualifying hybrid vehicle (It combines
an electric motor with a gasoline-powered engine).
For cars first put into use in 2005 the deduction amount is
limited to $2,000.
These vehicles qualify for the deduction:
• Ford Escape Hybrid —
Model Year 2006
• Mercury Mariner Hybrid — Model Year 2006
• Lexus RX 400h — Model Year 2006
• Ford Escape Hybrid — Model Year 2005
• Toyota Prius — Model Years 2001 through
2006
• Toyota Highlander Hybrid — Model Year
2006
• Honda Insight — Model Years 2000 through
2005
• Honda Civic Hybrid — Model Years 2003 through
2005
• Honda Accord Hybrid — Model Year 2005
One can claim the $2,000 deduction for the
year in which the vehicle was first used and applies to tax
years 2005 and earlier. It should be treated as an adjustment
to income.
Use Form 1040 and identify your deduction as “Clean-Fuel.”
Starting in 2006 the deduction is replaced with a credit,
which will require a different certification. The tax credit
for hybrid vehicles applies to vehicles purchased on or after
January 1, 2006.
This deduction can be claimed by businesses and individual
taxpayers alike. See IRS Publication 535, Business Expenses
for more information on the clean fuel deduction. It is available
at IRS.gov or call 1-800-TAX-FORM (1-800-829-3676).
Links:
• Publication 535, Business Expenses (PDF 422K)
• Form 1040, U.S. Individual Income Tax Return (PDF
176K)
• Form 1040X , Amended U.S. Individual Income Tax
Return (PDF 110K)
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