Alternative Motor Vehicle Credit

The Alternative Motor Vehicle Credit was enacted with the Energy Policy Act of 2005. Taxpayers may claim the Alternative Motor Vehicle Credit on form 8910. Many hybrid cars may benefit from the Alternative Motor Vehicle Credit; the Alternative Motor Vehicle Credit applies to qualifying hybrid vehicles that were purchased or put into service on or after January 1, 2006. However, only the purchaser of a new vehicle is eligible for the Alternative Motor Vehicle Credit. If a qualifying vehicle is leased, it is the leasing company, not the leasor, that may claim the Alternative Motor Vehicle Credit. The size of the Alternative Motor Vehicle Credit has somewhat complicated limitations. It decreases with the number of vehicles sold and is a function of when the vehicle was bought. For example, vehicle buyers can claim the full amount of the Alternative Motor Vehicle Credit only if the qualifying vehicle is purchased before the April 1 following the quarter in which the threshold amount of qualifying vehicles has been sold by a particular manufacturer (e.g. 60,000 in 2010). Buyers can claim a 50% Alternative Motor Vehicle Credit in the second and third calendar quarters after the threshold of sales is met. In the fourth and fifth calendar quarters, buyers can claim a 25% Alternative Motor Vehicle Credit. The Alternative Motor Vehicle Credit is not available in the sixth calendar quarter and any thereafter.

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