Hybrid tax credits hit the redline

U.S. federal tax breaks for buyers of hybrid cars will start shrinking this fall, with Toyota hitting the production limit of 60,000 units after only five months of sales.

The declining scale for tax credits triggered by the production limit will cut credits for Toyota and Lexus hybrids in half by the end of September, and to a quarter of the current rate next April. However, full tax credits are still available for Toyota's market-leading hybrids through the end of the current quarter, so we can expect a sales boost as buyers hurry to get the maximum tax break.

Hybrids from other manufacturers aren't selling as well, so they will hang on to their full tax credit until they hit the 60,000 unit ceiling - which won't be anytime soon. In the first quarter, Toyota sold 41,779 hybrids to Honda's 9,072 and Ford's 6,192.

[Source: USAToday]