Some Iowa car dealerships, desperate for customers, are offering year-end deals and buyers have the chance to clean up if they’re in the market for a fuel-saving hybrid. West Des Moines C-P-A Jeff Strawhacker says there are couple of ways to save on your taxes by buying one of those popular, snappy vehicles that combine gasoline and electric engines.
For 2005, Strawhacker says there’s a deduction of up to two-thousand dollars for the purchase of a hybrid vehicle and the I-R-S has published, on its website, a list of all vehicles that would qualify as a hybrid. For 2006, he says there will be a tax credit of up to 34-hundred dollars for those purchases. Both are significant bonuses which Strawhacker says people who are car-shopping should consider.
He says deciding which of the two tax breaks is best for you comes down to your individual tax situation for 2005 and ’06, deciding whether a deduction versus a credit is to your advantage. Strawhacker says the government is recognizing high gas prices are here to stay and this is a nice incentive for people to go to something more fuel-efficient.