Taxpayers who purchase certain energy-efficient vehicles, including some hybrid vehicles, qualify for tax credits. The credits go up to $3,150 for a Toyota $3,150, $2,600 for a Toyota Highlander or a Camry Hybrid, and $2,200 for a Lexus RX400h.
To qualify, the vehicle must be placed in service after December 31, 2005. The credit doesn’t apply to a used hybrid vehicle.
However, the tax credit begins to phase out after the manufacturer sells 60,000 qualifying passenger automobiles and light trucks. Sales of these vehicles from Toyota Motor Sales USA (which owns Lexus) have been brisk this year so this threshold may be reached soon.
The bottom line: if you’re planning on buying a hybrid Toyota or Lexus, buy it before October 1 to claim the full credit. After that time, the tax credit might be only half of the amounts listed above.