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<p class=MsoNormal><span class=storysubheadline1><b><font size=5 color=black
face=Arial><span style='font-size:18.0pt'>Big new tax breaks for hybrid cars</span></font></b></span><font
color=black face=Arial><span style='font-family:Arial;color:black'><br>
</span></font><span class=storytease1><b><font color="#666666" face=Arial>Starting
next year, buying a fuel-efficient vehicle will help keep IRS at bay.</font></b></span><font
color=black face=Arial><span style='font-family:Arial;color:black'><br>
</span></font><span class=timestamp1><font size=1 color="#666666" face=Verdana><span
style='font-size:7.5pt'>December 22, 2005: 1:15 PM EST </span></font></span><font
color=black face=Arial><span style='font-family:Arial;color:black'><br>
</span></font><span class=storybyline1><i><font size=1 color=black
face=Verdana><span style='font-size:8.5pt;color:black'>By Peter Valdes-Dapena,
CNNMoney.com staff writer</span></font></i></span><font color=black face=Arial><span
style='font-family:Arial;color:black'><o:p></o:p></span></font></p>
<p><st1:State w:st="on"><st1:place w:st="on"><b><font size=3 color=black
face=Arial><span style='font-size:12.0pt;font-family:Arial;color:black;
font-weight:bold'>NEW YORK</span></font></b></st1:place></st1:State><b><font
color=black face=Arial><span style='font-family:Arial;color:black;font-weight:
bold'> (CNNMoney.com) - If you just bought a brand new fuel-efficient hybrid
vehicle, sorry but you should have waited. </span></font></b><font color=black
face=Arial><span style='font-family:Arial;color:black'><o:p></o:p></span></font></p>
<p><font size=3 color=black face=Arial><span style='font-size:12.0pt;
font-family:Arial;color:black'>Starting Jan. 1, 2006, buyers of some hybrid
vehicles can get a hefty tax credit. But the credits vary a lot and some very
fuel-efficient vehicles still get no credits at all.<o:p></o:p></span></font></p>
<p><font size=3 color=black face=Arial><span style='font-size:12.0pt;
font-family:Arial;color:black'>In some cases, though, the credits are large
enough to almost entirely make up the additional cost of the hybrid vehicle as
compared to a non-hybrid. That means any money you save on gas will actually go
directly into your pocket.<o:p></o:p></span></font></p>
<p><font size=3 color=black face=Arial><span style='font-size:12.0pt;
font-family:Arial;color:black'>Previously, some hybrid vehicle purchases have
been eligible for tax deductions. The new credits, however, are subtracted
directly from the money you owe the IRS. That makes these credits much more
valuable than deductions.<o:p></o:p></span></font></p>
<p><font size=3 color=black face=Arial><span style='font-size:12.0pt;
font-family:Arial;color:black'>Even though the new tax law covers diesels as
well as hybrids, no diesel vehicles will get tax credits in spite of the fact
that some get extremely high gas mileage, according to an analysis by the
American Council for an Energy Efficient Economy.<o:p></o:p></span></font></p>
<p><font size=3 color=black face=Arial><span style='font-size:12.0pt;
font-family:Arial;color:black'>The Internal Revenue Service has not officially
said, yet, what the tax credits will be, but the ACEEE based its figures on
what is currently known about 2006 vehicles and the wording of the law.<o:p></o:p></span></font></p>
<p><font size=3 color=black face=Arial><span style='font-size:12.0pt;
font-family:Arial;color:black'>The amount of the credit for each vehicle is
based on three factors:<o:p></o:p></span></font></p>
<p><font size=3 color=black face=Arial><span style='font-size:12.0pt;
font-family:Arial;color:black'>First, how large is the vehicle? The amount of
the credit is based on the vehicle's fuel economy as compared to a similar 2002
model-year vehicle. To get any credits at all, a vehicle must get at least 25
percent better fuel economy than a similar 2002 vehicle.<o:p></o:p></span></font></p>
<p><font size=3 color=black face=Arial><span style='font-size:12.0pt;
font-family:Arial;color:black'>A vehicle could also get a smaller credit if it
is estimated to save at least 1,200 gallons of fuel over its lifetime.<o:p></o:p></span></font></p>
<p><font size=3 color=black face=Arial><span style='font-size:12.0pt;
font-family:Arial;color:black'>Vehicles also must meet certain emissions
standards to qualify for a tax credit. Regardless of their fuel economy, no
diesel vehicles currently meet the emissions requirement for a tax credit.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'><o:p> </o:p></span></font></p>
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