Is Energy Tax Credit Ruining Incentive to Buy Hybrid Vehicles?

As the government reforms its tax deduction program into a broader reaching tax credit I ask myself: Is this program a step in the right direction and who does it benefit? The new system assigns each hybrid model a tax credit based on its fuel saving potential and emissions. The credits are available to the original buyer of a hybrid vehicle purchased after December 31, 2005. Vehicles purchased before that date maybe eligible for other incentives. Also, credits of leased vehicles are at the discretion of the leasing company and are not available to the driver. All used hybrids are exempt.

Some of the benefits of the new tax credits are higher payouts for the most efficient vehicles and more Americans having access to the payout. The previous deduction of $2000 dollars is being replaced with different payouts based on the model car you buy. The Toyota Prius was scheduled to be one of the more lucrative models at $3150. To use the old deduction your total deductions must have exceed the governments generous standard deductions to benefit. Therefore, lower income Americans who don't have a mortgage or make generous donations throughout the year may not have been able to use the previous incentives. A tax credit is beneficial to anyone who has a tax liability at the end of the year. Meaning, the government is entitled to some of the money already paid in or the taxpayer owes more money when they file their return. The new credit can be used to lower your tax liability, but only zeros it out. Meaning you cannot increase your return only avoid paying in more.