As hybrids become more and more mainstream, consumer tax credits for buying hybrids and continuously dwindling away.
Before the end of this year, buyers of the Civic Hybrid will still get the tax credit of $2,100 and buys of the Accord Hybrid will still get the tax credit of $1,300. But in the new year, those credits will be cut exactly half off. The Civic hybrid will get a $1,050 tax credit, the Accord Hybrid will get a $650 tax credit. Worse yet, after July 1, 2008, they will be halved again, with the Civic Hybrid getting $525 tax credit and $325 tax credit for the Accord Hybrid.
The tax credits were established in hybrids' infancy. The reason, of course, was to encourage Americans to invest in relatively energy-efficient automobiles despite the premiums of up to several thousand dollars each that automakers charge for obtaining a hybrid powertrain versus a conventional one. But the legislation called for phasing out the tax credits once a company's hybrid sales reached 60,000 total units- an indicator of sufficient consumer interest to have established the vehicle in the market. Specifically, the law calls for a beginning of a phase-out in the second calendar quarter after the quarter in which the manufacturer sells its 60,000th hybrid or lean-burning-technology vehicle.