IRS to Offer Tax Credit to Hybrid Car Owners

The Internal Revenue Service said it will extend a tax credit of up to $2,000 to buyers of gasoline-electric hybrid vehicles, but only Japanese auto makers are likely to benefit in the near future.

The IRS said the credit will apply to original owners of vehicles certified by the government as hybrids, which tether a regular gasoline engine to an electric motor and battery pack. To qualify, manufacturers have to pledge that the hybrid systems cost at least $2,000 to build.

But the IRS also said the credit, which would be deducted from the buyer’s gross income on a tax statement, will apply in full only to hybrids bought by the end of 2003. In 2004, it will begin to be phased out, with no credit offered after 2006.

The only vehicles that probably would qualify today are Japanese models--Honda Motor Co.’s Insight and Civic hybrids and Toyota Motor Corp.’s Prius.