Tax Break For Honda In Last Month Of Phase Out

The federal tax credit for the Honda hybrids will be phased out after December 31, 2008. Honda has reached the 60,000-unit cap on tax credits for its hybrid vehicles. According to the company, it has no plans to offer incentives to customers who are looking for hybrid vehicles.

Tax credits for Toyota products were phased out in 2006, and Toyota has said that it is considering incentives for its hybrid vehicle lines, after posting the worst quarterly sales figures in the last decade. Vehicle sales are off substantially for most manufacturers, including Honda. The downturn is attributed to persistent worldwide economic woes.

Toyota is introducing a redesigned Prius and a new Lexus Hybrid at the North American International Auto Show in Detroit in January, which is expected to perk up demand for the vehicles. Currently, production of Toyota's hybrid vehicles is limited by battery production constraints. The company may use consumer incentives to prop up demand for the vehicles, and make them cost-competitive with the 2009 Honda Insight hybrid, which Honda has said will have a base price of less than $20,000.

Full tax credits are still available for vehicles made by domestic manufacturers and vary in value, depending upon the vehicle purchased. The maximum credit available is $3,400.