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Starting in 2006, men and women acquiring hybrid automobiles will get a tax credit instead of a tax deduction. The IRS has just started to kick out the precise amounts you can claim for your new hybrid. Numerous Ford and Mercury Hybrids Get Tax Credit Certification From IRS Below the Power Policy Act of 2005, the tax advantages of owning a hybrid car underwent significant changes. Whereas you could previously claim a tax deduction, the new law converted the deduction into a tax credit. Tax credits are FAR more valuable than deductions, since they reduce the amount of tax you owe on a dollar for dollar basis. Tax Deductions, on the other hand, merely minimize your adjusted gross revenue prior to figuring out the amount of tax you owe pursuant to the tax tables. In laymens terms, this conversion is a very very good thing. Not each and every hybrid automobile qualifies for a tax credit. The Internal Revenue Service must very first evaluate it and then situation guidance on which automobiles qualify and the size of the credit you can claim for each and every. The optimum the IRS can designate per automobile is $three,400. Right here are the numbers it not too long ago kicked out for different Ford and Mercury hybrid models. 2006 Ford Escape Hybrid Front WD: $2,600 2006 Ford Escape Hybrid four WD: $1,950  dodge ram headlights 2006 Mercury Mariner Hybrid 4 WD: $1,950  If you purchased your hybrid auto prior to 2006, you are restricted to claiming a tax deduction in the amount previously designated by the IRS, generally $two,000. If you waited till 2006, you can claim the above amounts with a few hitches. First, the amount only applies to the first 60,000 cars sold for every model. If you obtain a hybrid in the 60,0001 to 120,000 sales range, you can claim only half of the tax credit. Sales 120,001 by way of 180,000 can claim on a quarter of the quantity designated above. Exactly how you are supposed to know the sales figures is a bit murky, but Ford and Mercury will undoubtedly take measures to make it clear. Hybrid cars make sense from an environmental aspect. Throw in significant savings on gas expenses and a huge tax credit, and they ought to fly off the lots.