Tax Relief: Hybrid Vehicles

Tax relief is granted by the US Internal Revenue Services for the purchase of hybrid vehicles. Therefore, if you purchased a hybrid vehicle during the 2007 tax year, you could be standing in line to receive a tax credit that is worth as much as $3 000. This is the standard tax relief rate for the most fuel efficient models of hybrid vehicle. Generally speaking, though, it also depends on the make and model and when the vehicle was bought.

This specific tax credit is known as the “Alternate Motor Vehicle Credit”. It applies to vehicles placed into service on or after January, 2006. There are many hybrid vehicles currently available that qualify for this tax relief.


Vehicle owners may claim the credit on their 2007 tax return, if they placed such a vehicle into service in 2007. Since March 2007, forty different hybrid models are eligible for the “Alternate Motor Vehicle Credit”.

This form of tax relief is only available to the original purchaser of the hybrid, or advanced lean burn technology, vehicle. However, if the vehicle is leased the credit will be passed to the leasing company.

Once 60,000 vehicles of a specific manufacturer have been sold, this tax relief benefit will be reduced and will, eventually, be eliminated. Your full tax credit may be claimed until the end of the 3rd month after the quarter in which the manufacturer sold its 60,000th vehicle.

Tax relief in the form of this credit is no longer applicable for qualifying Toyota and Lexus vehicles. It was eliminated from purchases after the 1st October, 2007.

By: N.F.Centeno

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