Wednesday, February 28, 2007

Should I buy a hybrid car just for the tax break?

Well, maybe. If you were going to buy a new car anyway, you might benefit, perhaps significantly. The government is offering income tax credits of between $250 and $3,400 -- depending, as it says, on the fuel economy and weight of the car. The New York Times reporter Tim Gray wrote in last Sunday's edition, "Your Taxes," that the tax credit amounts ride on how many hybrids an automaker sells in that quarter. Those who pay the alternative minimum tax, as Gray reported, might not get the hybrid tax break (it's not clear yet). Visit the Web site of the non-profit American Council for an Energy Efficient Economy for some estimated credits people might receive for various cars: Keep in mind that hybrids are all about saving gas. You can save gas by driving a small car that gets better gas mileage than some of the hybrids available. Some of the hybrids are efficient, and it's because they use less gas, not because they don't use any. Other tax breaks offered in 2006 and 2007: Energy Efficient products like insulation and roofs Tax credit of no more than $500 for windows, insulation, doors, roofs, and heating and cooling equipment. Solar photovoltaic panels Tax credit of 30 percent of the qualifying costs – but the credit can’t exceed $2,000 – of solar photovoltaic panels and solar water heating eqiupment – but not for pools and hot tubs. Energy efficient heating and cooling Tax credit of no more than $300 for installation of geothermal heat pumps and air source heat pumps for heating and cooling. Miscellaneous business credits Thirty percent tax credit for fuel cell power plants and solar systems. Tax breaks on petroleum-based energy: Tax credit of 10 percent of the cost of microturbine power systems for businesses. (Gas turbine engine, combustor, and regenerator) Tax credit of $300 for gas, oil, propane, or electric heat pump water heaters. My book, The Homeowner's Guide to Energy Independence, will be out within the week from Lyons Press/Globe Pequot Press.

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