Don't Mess With Taxes

Sure, Toyota and Lexus hybrid buyers are now getting just half the original tax credit for their energy-conscious auto purchases. But at least they have a few more reduced-credit choices.

The new tax break for fuel-efficient hybrids was created to encourage drivers to switch from fossil-fuel-only vehicles. But, as discussed in these previous posts, (note: when you click this link, this entry will show up first since it's the latest one tagged "hybrid," so scroll down for the earlier ones) the amount of credit a taxpayer can claim is reduced once a car maker sells 60,000 hybrids. In some cases, such as Toyota's, the credit will eventually disappear.

Just before Toyota's credit cut kicked in on Oct. 1, the IRS certified five more of the Japanese automaker's hybrids, bringing to 13 the credit-eligible models. Here's the complete list (just-added autos in green) with the current, half-value tax breaks that apply to vehicles purchased now through next March:

• 2007 Toyota Prius: $1,575
• 2007 Toyota Highlander 4WD Hybrid: $1,300
• 2007 Toyota Highlander 2WD Hybrid: $1,300   
• 2007 Lexus RX400h 2WD: $1,100 
• 2007 Lexus RX400h 4WD: $1,100   
• 2007 Toyota Camry Hybrid: $1,300
• 2007 Lexus GS 450h: $775   
• 2006 Toyota Prius: $1,575   
• 2006 Toyota Highlander 4WD Hybrid: $1,300   
• 2006 Toyota Highlander 2WD Hybrid: $1,300   
• 2006 Lexus RX400h 2WD: $1,100   
• 2006 Lexus RX400h 4WD: $1,100   
• 2005 Toyota Prius: $1,575

Of course, if you bought one of these vehicles, even one of the just-IRS-approved models, between Jan. 1 and Sept. 30, double the above amounts for the correct credit to claim on your 2006 return.

At the other end of the credit spectrum, come next April 1 the tax-break amounts will drop again, to 25% of the original credit. But don't worry about that math right now. We'll post the figures as April Fool's Day 2007 approaches.