Take Advantage of Tax Breaks on Hybrid Vehicles

A hybrid vehicle relies on multiple power sources, such as a combination of electric motors and an internal combustion engine. The power of hybrid vehicles is generated through an approximate 40% conversion of gasoline energy, in comparison to a standard internal combustion engine (ICE) that typically only converts 20%. Hybrid vehicles also deliver higher gas mileage, an average of 48 to 60 mpg (77 to 97 km) in comparison to an ICE that gets an average of 20 mpg (32 km). Given the environmental impact of gasoline-powered engines, many governments offer financial incentives in the form of tax breaks for hybrid vehicle owners. Residents of a jurisdiction must pay careful attention to the governmental requirements and procedures necessary for benefiting from these financial incentives. Here are the things to consider and steps to follow to take advantage of tax breaks on hybrid vehicles.

Steps

  1. Purchase a qualifying hybrid vehicle. Read your government's guidelines on the requirements of the hybrid vehicle.
    • Consider the manufacturer and vehicle production process. For example, the U.S. government offers a federal tax credit for the plug-in hybrid-electric vehicle (PHEV) if the vehicle is manufactured as a PHEV and is not a conventional car that has been converted to electric power.
    • Check the power source of the vehicle. Your government may require that the qualifying hybrid vehicle be powered with a battery source of a specific number of kilowatt hours or possess the capability to be recharged from an external electricity source.
    • Examine the gross vehicle weight rating. The vehicle may be required to be below a specific weight. For example, the U.S. federal tax break weight requirement for plug-in hybrids is a weight below 14,000 lbs. (6,364 kg.).
  2. Follow the guidelines for dates of purchase. To take advantage of a tax break, you may be required to have purchased the vehicle on or after a particular date.
  3. Check for new vehicle requirements. The tax break may only apply to brand new vehicles of which the taxpayer is the first owner.
  4. Abide by the geographic requirement. Your government may require that you use the vehicle primarily in your own country.
  5. Check the expiration dates for the tax break. The purchase of a specific hybrid vehicle may qualify you for a tax break in 1 year, but not the next. Examine the expiration dates of the tax break offer.
  6. Submit the required tax break paperwork.
    • Download the necessary tax forms. Check the tax website of your jurisdiction to locate the required forms.
    • Fill out and submit the required forms. For example, the Ministry of Revenue of Ontario, Canada offers a retail sales tax rebate on the purchase of hybrid electric vehicles (HEVs). Tax payers must fill out the Retail Sales Tax Application for Rebate form, indicating the vehicle purchase date, tax paid on the vehicle and other relevant information.



References

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