07-28-2005, 01:40 PM
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Active Enthusiast
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Real Name: Walter
Location: Central Mass.
Posts: 71
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New Energy Bill: Tax Credits for Hybrids
New Federal Energy Bill
Tax Credits for Hybrids.
The new federal energy bill appears to have passed Congress.
This bill has tax credits for the purchase of hybrids. Note, this is a tax credit -- the amount is subtracted from your tax bill. That is a $2000 tax credit saves you $2000. The current tax law gives you a $2000 tax deduction -- if your tax bracket is 25%, you save $500. A tax credit is much better.
The amount of the credit is based on what improvement in fuel efficiency compared to 2002 cars or the same weight class. So, a 2005 Prius II weighs between 2750 and 3000 lbs and the average mpg of 2002 cars of that weight was 28.8 mpg. The Prius gets between 175% and 200% of that mpg (190%), so the tax credit is
$1200 for a new Prius. If the 2006 gets a bit better FE or it increases to over 3000 lb, it might get $1600.
For the Honda Civic Hybrid: Weight is between 2500 and 2750 lbs. 2002 average was 31.7 mpg. HCH mpg is 47 (CVT) combined EPA (148% of 2002 mpg). So the tax credit is
$400 for a 2005 Honda Civic Hybrid. The HCH mpg is very close to the 150% mark (1.5x31.7 = 47.55 mpg) which would give it $800 credit. The 2006 HCH is claimed to have 5% better FE than 2005, so it should get $800, and if its weight increases to the next weight class it might get a $1200 credit. (Manual transmission has only 48 mpg, so results will be the same as CVT.)
The Insight manual transmission has an EPA combined FE of 63mpg and weighs 1850 lb. The average under 2000lb 2002 car got 45.2 mpg. So it gets: 139% of a 2002 car's FE. The 2005 MT Honda Insight gets a tax crediit of:
$400 for a 2005 Honda Insight. Despite its absolutely outstanding fuel efficiency, other cars in its weight class also get excellent fuel efficiency, which hurts its potential for tax credit. I think this illustrates the inadequacies of the formula for this tax credit.
For a hypothetical Hummer Garguantua Hybrid with a weight over 26000 lb, and a non-hybrid version get 2 mpg and the hybrid version gets 3 mpg, the tax credit could be up to $15,000.
$15,000 tax credit for a Hypothetical Hummer Garguantua Hybrid (HHGH).
Link to the House version of the bill:
HTML Code:
http://thomas.loc.gov/cgi-bin/query/F?c109:5:./temp/~c1095zrXOR:e1440906:
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