According to professor Edward McQuarrie of the Leavy School of Business at Santa Clara University, the tax break for hybrid vehicles isn't very transparent. In fact, it's so murky that many won't receive a penny of the expected credit.

McQuarrie says the "bizarre legislation" started with the energy bill that Congress passed in 2005. One of the incentives was a tax credit beginning in January 2006 for those who purchase an approved gas-electric hybrid vehicle. The Toyota Prius received the top break of up to $3,150, which drops according to the number of vehicles sold.

But families who earn between $150,000 and $500,000 might not see a dime of any credit. Those over $750,000 have a good shot at the credit. A quirk in the legislation says a household can't get the credit unless the regular tax obligation exceeds the Alternative Minimum Tax. Bottom line: the Republican Congress in its rich-get-richer manifesto reserved the tax credit for those who pay a lot of taxes. Dual-income families that can make the most of the hybrid are likely shut out.

McQuarrie's report is detailed beyond my simple accounting background. I suggest hybrid owners who are not millionaires to read it before expecting your tax preparer to save you some money.

[Source: Edward F. McQuarrie / San Francisco Chronicle]


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