More Advantages Help Get More Hybrids on the Road
The federal government and some cities and states offer a range of perks to new hybrid owners. These incentives help increase the number of low-emission, high-mileage vehicles on the streets.

Here are some of the hybrid perks available across the United States:

Driving solo in carpool lanes
The federal government is making changes in the laws regulating single-passenger access to carpool lanes (High Occupancy Vehicle, or HOV). The recent federal comprehensive energy bill allows states to permit solo hybrid driving in HOV lanes.

California now allows solo driving in HOV lanes for hybrids with EPA-rated fuel economy of at least 45 mpg that also meet the state's AT-PZEV [1] (Advanced Technology Partial Zero Emission Vehicle) emission standard. Prius qualifies. Drivers must obtain a Clean Air Vehicle Sticker from the California DMV.

Florida has a similar program, for which both Prius and Highlander Hybrid qualify.

Arizona, Colorado and Georgia have passed legislation for similar programs that have yet to be implemented. New York, Massachusetts, Minnesota and Maryland have HOV bills under consideration. Check with your state's motor vehicle department for the status of programs in your state.

Free parking
Some cities encourage the use of hybrid vehicles by waiving parking fees. Los Angeles allows free meter parking for hybrids with a California Clean Air Vehicle Sticker, valid through June 30, 2006. Buyers who purchase hybrid vehicles in San José get free parking at meters and in municipal lots. The cities of New Haven and Albuquerque issue decals permitting hybrid owners to park free of charge at city meters.

Federal tax benefit
The current $2000 IRS personal income tax deduction that applies to Prius and Highlander Hybrid purchases expires at the end of 2005. It will be replaced in 2006 by a tax credit authorized by the recent federal energy bill. The credit will range from $250 to $3150 -- depending upon several factors including the fuel economy of the hybrid model. This credit will reduce what you will actually pay in income tax, in contrast to a deduction from taxable income.

State tax benefits
The tax benefits that states offer to hybrid buyers come in all shapes and sizes. The list below is not all-inclusive, as there are dozens of bills pending, promising continued expansion of the nation's landscape of hybrid perks.

Below is a summary of tax benefits states are currently offering:

  • Colorado grants a state tax credit for buyers of hybrid vehicles based on model year and other factors.
  • Connecticut offers a sales tax exemption for purchases of new hybrids with an EPA-estimated highway mileage rating of at least 40 mpg.
  • Louisiana allows a state income tax credit on the partial value of hybrid vehicles.
  • Maine buyers of a new Highlander Hybrid are eligible for a partial sales tax exemption of approximately $300. Prius buyers get a $500 exemption because Prius is a hybrid-only model, whereas Highlander can be ordered with or without a hybrid powertrain.
  • New Mexico allows a one-time exemption of the excise tax (amounting to 3% of the purchase price) for hybrid vehicles with a minimum estimated EPA rating of 27.5 mpg.
  • New York offers buyers of qualified hybrids a tax credit of up to $3000, depending on the vehicle's fuel economy.
  • Oregon has a state income tax credit of up to $1500 for buyers of qualifying hybrid models.
  • Pennsylvania grants funds to partially offset the cost of new hybrid vehicles, but the program is only open during certain periods and while funds last.
  • Washington, D.C. exempts owners of hybrids and other alternative fuel vehicles from the excise tax on their vehicles, and has lowered vehicle registration charges.
Be sure to check with your state's tax agency before calculating the savings on your next hybrid, and consult your tax advisor before claiming benefits.

1. To receive the AT-PZEV designation -- which is given in California and other states -- a vehicle must be SULEV-rated (Super Ultra Low Emissions Vehicle), meet a zero fuel evaporative standard, have passed a 150,000-mile durability demonstration, and offer an extended emission system warranty. Additionally, it must contain technologies recognized by the California Air Resources Board as advancing toward zero emissions.