With the Energy Policy Act of 2005, the IRS has provided buyers of hybrid vehicles with a tax credit to encourage the purchase of fuel-efficient hybrid-electric vehicles, which can help to reduce air pollution. The amount of the tax credit is based on the number of hybrids a manufacturer has sold within a specified period. The full tax credit only being available for purchases completed through the calendar quarter after the quarter in which the manufacturer reaches cumulative sales of 60,000 hybrid vehicles. The tax credit is then reduced by one-half for the next six months; by another one-half for the next six months; and then phased out completely.

When Toyota Motor became the first automaker to break the 60,000 hybrid threshold in May 2006, the clock started ticking to September 30, 2006, when the tax credits would reduced.

Starting yesterday (October 1, 2006), buyer of Toyota and Lexus hybrids are, at most, eligible for the following credits:

• Toyota Prius: $1,575
• Toyota Camry Hybrid: $1,300
• Toyota Highlander Hybrid: $1,300
• Lexus RX 400h: $1,100
• Lexus GS 450h: $775

Beginning on April 1st, 2007 (continuing until September 30, 2007) tax credit for Toyota and Lexus hybrids drops again:

• Prius: $787.50
• Camry Hybrid: $650
• Highlander Hybrid: $650
• Lexus RX 400h: $550
• Lexus GS 450h: $387.50

After September 30, 2007, Toyota and Lexus hybrids will no longer qualify for IRS credits.

## Source: Toyota ##

Posted in: Lexus, Toyota, Legal/Government, Hybrids, Incentives, Car Buying
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