Hey, WB! (I always wanted to say that)
Tax info: See the forms and publications at
http://www.irs.gov .
And don't do your taxes based only on what I have reported below! I'm not a CPA. I'm a computer geek. And half the time I can't spell either one of those words correctly.
*** DISCLAIMER: I looked this stuff up, and figured it out as best I could. If you know my statements below to be wrong, please let us know. I certainly don't know it all.
Here goes: It's a "tax deduction", not a "tax cut." That means your taxes don't go down by $1500 (this year) or $1000 (next year). Your "marginal rate" is figured in.
So here's how you can figure your tax savings:
1500 X .mr = savings
where ".mr" is your marginal tax rate. The tax rates are as follows:
.15 = 15%
.28 = 28%
.33 = 33%
.35 = 35%
...and if you make more than $100,000, you're in the "bendover" tax rate, and you'll have to go do your own research. (or pay me an ungodly amount of money, and I'll be glad to do it for you)
.."ahem!"
You didn't say what your "taxable income" is. This can vary widely. It's on your 1040 form for tax year 2003, line 40. But for this example, I'll just guess: If you're married, filing jointly, and you have a combined gross income of 80K, you're probably reporting something around $65K for taxable income. This puts you squarely in the 25% marginal tax bracket.
Crash course on marginal rates: As a married couple, you'll be taxed as follows:
10% on your first $14,000.
15% on money you make between $14,000 and $56,800
25% on money you make from $56,800 to $114,700
Confusing? Yeah, it is. And I believe it's the only reason we don't have another violent revolution in this country. We're all too dizzy from confusing forms and booklets and tax law changes!
Anyhow, if I understand the deduction correctly, here's how you'd figure it with "kitchen table" math:
Buy car this year: $1500 X .25 = $375.00 less taxes to pay
Wait for next year: $1000 X .25 = $250.00 less taxes to pay
Deciding whether to buy a $20,000 or $25,000 vehicle this year or next should probably not hinge on the $125 difference my math above shows. Use other criteria.
<editorial mode on>
Yeah, it's nice to get some money back, but in my opinion, this is a government-instituted insult to taxpayers' intelligence, and it's an abyssmal treatment of people who want to do the right thing. For most people paying $20,000 to $30,000 for a hybrid car ), it won't even be a single month's payment!
If you're wondering about my math, well...yes, your #9 plus tint, plus tax, plus mirror, plus Lojack could well be at or above $30,000.
<editorial mode off>
As you can see, your savings in taxes is far far less than even the sales tax you will have paid on your car. Even with a hybrid, it's possible that you may even spend more in gasoline than you got back in taxes.
So the moral of the story is: If you decide to buy a hybrid, do it because you want to burn less fuel, or because you want to pollute less, or because you pride yourself on being an early-adopter for the benefit of other consumers next year or farther into the future. Or do it just because you want the damned car. But don't only do it because you want to save in taxes, because as you can see, the incentive just isn't all that great.