For official information go to: http://www.irs.gov/newsroom/article...=157632,00.html
In short it works like this: it's a 2,600 tax credit you claim on your 2006 return from the total amount you owe. One may claim full tax credit if the car is bought not later than the first quarter after the car maker sells the 60,000th hybrid of the year (starting Jan. 2006). Since Toyota reached that back in June (second quarter of this year) the full credit will expire Sept. 30 2006. After that, for two quarters, one may claim 50% of the tax credit (1,300 for TCH). Starting in April 2007, one may claim 25% of the tax credit ($650) until the end of Sept 2007, then it's all gone for Toyota. The other manufacturers are expected to reach the 60,000 figure much later so quite a few people will probably look elsewhere to get the full credit.

As for why end then - I think it's the strong lobby of domestic car companies on Capitol Hill (don't want to generate controversy, just my opinion). Still, with the Japanese car makers opening their plants in US, and GM-Chrysler-Ford moving overseas, I really don't know who is/isn't "domestic" anymore.