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Loss of hybrid tax breaks may hurt Toyota

Siddarth Raja

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2,080 views Sep 21, 2006

Loss of hybrid tax breaks may hurt Toyota

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It seems that the old saying “no good deed goes unpunished” is true, at least in the case of Toyota, whose hybrid vehicles have been a massive sales success. Most hybrids are subsidised by federal tax breaks that can go up to $3150 in the case of the Prius. The problem for Toyota is that they’ve been too successful and have reached the legal limit of 60,000 for production of hybrid cars to remain eligible for a tax break.

Under the laws passed by Congress, once production is reached the full tax break lasts for one more quarter, then halves for six months, then halves again for six months, and is then abolished altogether.

Other manufacturers producing hybrids such as Honda, GM, and Ford haven’t reached this limit and will therefore continue getting benefits. What does this mean for you? If you’re in the market for a Toyota hybrid, you better move quickly to save a fair chunk of cash. There’s no word on how dealers will react to these tax cuts.