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The IRS announced today that the 2005 Prius has been certified as eligible for the clean-burning fuel deduction.

Also, under the recently signed Working Families Tax Relief Act of 2004, the clean-burning fuel deduction is up to $2,000 for certified vehicles first put into service in 2004 and 2005. The deduction will be limited to $500 for vehicles placed in service in 2006 and no deduction will be allowed after that year.

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--Jim Volz
 

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tax deduction

so if it is first put on the road in 2004 or 2005, does that mean you get $2000 back, not $1500...the up to $2000 confuses me...
 

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From the irs web site:

# Clean fuel vehicle deduction — the maximum amount of this deduction was scheduled to drop this year and next, but has been retained at the $2,000 level through 2005. IR-2004-125 has information on this deduction and the newest vehicle to qualify for it.

Yippie
 

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Yup. Also, of 2005 hybrids, only the Prius has been approved for the deduction. I would expect the Honda hybrids will be approved by end of January, as they were last (actually this) year.
 

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Re: tax deduction

WhitePrius said:
so if it is first put on the road in 2004 or 2005, does that mean you get $2000 back, not $1500...the up to $2000 confuses me...
A point of clarification....it's not a tax credit. It's a deduction.

Louie
 

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Correct; you get to take $2000 off your income. How much that reduces your taxes depends on your tax bracket.
 
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