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Originally Posted by ElanC
There is no tax incentive for hybrids in California.
Your refund depends on how much tax you have withheld from your paycheck. I think you're asking how much credit you'll get back for buying an HCH. The IRS hasn't published official figures yet, but based on the language of the law the estimate is about $2100.
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There is a tax incentive in the works in California. It was mentioned in the link that I posted earlier in this forum. It would allow a $3,000 deduction starting with the 2006 tax year. It is bill number AB 2616. If you want to check out the status of this bill on the official website, go to the following link and search for bill number 2616.
http://www.leginfo.ca.gov/bilinfo.htm
As for federal, it is a credit and is not based upon how much is deducted from your paycheck. It is based upon your tax liability. As long as your tax liability is greater than your credit, you can fully utilize the credit. If for example, your tax liability before the hybrid credit is only $1500, you would only be able to use $1500 of the available $2100 credit. The bottom line here is that you cannot have a negative tax liability.
This is all based upon my previous experience dealing with tax credits and their rules on my own taxes.