The Price of Saving Fuel

We may soon see more “green” vehicles on the road. According to Kiplinger.com, a survey by Capital One Auto Finance found that a third of their participants would likely purchase a green vehicle as their next auto purchase. People are considering one of the alternative-energy vehicles for a number of reasons, including the high price of gas. Some also want to do their part to help the environment, such as our air quality. But no matter the reason, most green vehicles qualify for tax deductions—and this alone is a great reason to buy one. However, you should know you'll pay an average of $5,500 more for a 2010 hybrid than for its gasoline-engine counterpart.

One way to see whether it pays to buy a green vehicle is to calculate the five-year ownership costs. What are your long-term savings at the pump as well as tax credits for the many green vehicles? When we compared the ownership costs of hybrids versus conventional vehicles in early 2009, gas prices we’re hovering just above $2 a gallon, and few hybrids earned back their extra cost with savings at the pump. But with gas now closer to $3 and with more eco-friendly vehicles on the market, you can more often save green by buying green.

The Kiplinger.com article updated calculations, pitting 19 hybrids and 11 diesels against comparable gas-engine vehicles. The numbers assume that you drive 15,000 miles a year and that regular gasoline is $2.85, premium is $3.15 and diesel is $3.08, with a 3.5% annual increase for each fuel. The math also includes depreciation, maintenance and repairs, and it assumes you finance the vehicle with a five-year loan after a 15% down payment. Don’t forget to account for federal tax credits for vehicles that still qualify for them; they've expired for Ford, Honda, Lexus and Toyota hybrids. (If you're hit by the alternative minimum tax, the credit won't help you, so your payback time will be a bit longer.)

Winners and losers according to Kiplinger.com: Diesels pay back their premium more often than hybrids do. Over five years, every diesel except one -- Volkswagen's Golf TDI -- costs less to own than the comparable gas-engine model. The savings range from $307 on the BMW X5 35d to $6,082 on the Mercedes-Benz GL350 Blue-Tec (the $60,825 diesel GL is priced $1,000 below the gas-engine GL450 and has a tax credit of $1,800). Among hybrids, you're more likely to be on the losing end of the deal as long as a gallon of gas still costs about $3. You'll save the most buying the super luxury Mercedes-Benz S400 hybrid ($92,475). It beats the S550 by $6,764 over five years -- mainly because it costs $3,650 less than the S550 and carries a tax credit of $1,150. But in general, the more expensive a hybrid, the less likely it will save money over its gas-engine sibling. For example, the biggest losers are the Chevrolet Tahoe and GMC Yukon hybrids (both about $52,000) -- which would cost you $10,000 more than their gas-engine comparables over five years -- and the Lexus LS 600h L ($109,675), which would cost a whopping $41,428 more to own.

I recently wrote a blog on the topic, 10 Vehicles that Still Qualify for a Federal Tax Credit. Check it at http://ronideutch.blogspot.com/.

10 Vehicles that Still Qualify for a Federal Tax Credit

Unfortunately, many of the federal tax credits for popular hybrids – such as the Toyota Prius – expired quite a while ago. However, although a handful of vehicles no longer qualify for the tax incentives, there are plenty of energy efficient automobiles that can still result in a decent tax credit.

To assist the readers of my blog looking to invest in a hybrid vehicle, please enjoy the following list of 10 vehicles that are still eligible for the IRS credit. I have provided information as to the amount of the credit and basic information on each automobile.

1. 2010 BMW Active Hybrid X6 – Credit: $1,500

The 2010 Active Hybrid X6 BMW boasts superb fuel efficiency while maintaining the speed and class of a regular BMW. Although the vehicle does not have the best fuel efficiency rating or the lowest price tag, the vehicle is being marketed towards consumers who want an efficient luxury vehicle that can go from 0 to 60 in less than 6 seconds. The BMW Active is listed at $88,900 and qualifies for a federal tax incentive of $1,550.

2. 2010 Audi A3 TDI – Credit: $1,300

The 2010 Audi A3 TDI is a clean diesel SUV with the same capabilities as any typical sports utility vehicle; it also seats seven. Since the automobile uses diesel fuel, drivers can claim a tax credit for this car of up to $1,300. The Audi A3 TDI is one of the first of its kind, and was even awarded the 2010 Green Car of the Year award from Green Car Journal.

3. Chevy Volt – Credit: $7,500

Although the Chevy Volt has not hit sales floors yet, there is already a lot of anticipation of its upcoming release. The vehicle has an electric motor – powered by lithium ion batteries – and the car can travel 40 miles on a single charge. Although an official price has not been announced, experts predict it will be priced around $40,000, which would correlate with a tax credit of $7,500.

4. Tesla Roadster – Credit: $7,500

The most significant federal tax credits are available for plug-in electric vehicles, such as the Tesla Roadster. The credit amount may not seem as significant compared to the Roadster’s steep $109,000 price tag. However, many states including California are offering additional incentives for taxpayers who buy or lease a Tesla Roadster.

5. 2010 Mercedes Benz ML450 Hybrid – Credit: $2,200

The 2010 Mercedes Benz ML450 is another hybrid offering drivers a luxury car that can be driven on only electricity, only gasoline, or an efficient combination of the two. The small scale SUV gets around 24 miles per gallon and qualifies for a $2,200 federal tax credit.

6. 2011 Nissan Leaf – Credit: $7,500

The 2011 Nissan leaf is among the most affordable electric vehicles. It has not hit the market yet, but according to reports it can travel 100 miles on a $3.00 charge of electricity. The leaf will arrive at Nissan showrooms across the country this December. The MSRP should be around $32,780 before the credit, and the vehicle will also qualify for a $5,000 Californian clean vehicle rebate.

7. 2010 Chevrolet Tahoe Hybrid – Credit: $2,200

The Chevy Tahoe Hybrid has an MSRP of $51,185, however if you purchase one before December 31^st then it will qualify for a $2,200 federal credit. The vehicle averages 21 miles per gallon. Although the Tahoe is not the most efficient vehicle on my list, considering its size the mileage is still impressive.

8. 2010 GMC Sierra Hybrid – Credit: $2,200

If you need to drive a truck that can haul items, but are looking for a way to cut your fuel expenses, then you should consider the 2010 GMC Sierra Hybrid. The truck is best for city drivers, who can benefit from a 21 mile per gallon average. Additionally, the Sierra has a $38,710 MSRP and will qualify for a $2,200 federal tax credit.

9. 2010 Mercedes Benz GL350 BlueTec – Credit: $1,800

Car buyers looking for clean-diesel technology as well as enough room for the whole family should look to the Mercedes Benz GL350 BlueTec. The vehicle also boasts impressive safety features such as a fuel system shutdown in the event of an accident. Although the price is a bit high at $60,825, the GL350 does qualify for a $1,800 tax credit.

10. 2010 Cadillac Escalade Hybrid – Credit: $2,200

Energy conscious Cadillac Escalade fans can now get the full-sized luxury SUV they love, in the form of an efficient hybrid. With a base MSRP of $51,185, the automobile boasts a 5-star crash rating, and 3-row seating. It also qualifies for $2,200 federal incentive if you purchase before the end of the year.

Top 10 “Green” Tax Credits and Deductions

Although gas prices have dropped over the past few months, going “green” and helping to improve the environment is still at the top of everyone’s mind. Additionally, the federal government also offers a wide variety of energy efficiency related tax credits to help encourage taxpayers to “go green.”

1. Hybrid Vehicles

Eco-friendly automobiles are more than good for the planet. They are good for your wallet! In fact, buying any hybrid vehicle can earn you a tax break of anywhere between $200 and $3,500. Both the weight of the vehicle and how much gasoline it saves affects how much of a break you will receive, so be sure to do your research before making any large purchases!

2. New Roof

Investing in a new energy-efficient roof is a great way to save money, help the planet, and put value into your home all at the same time. Energy-efficient roofs come in a variety of materials and types, but the most common would be a metal roof. To be sure your roof is as efficient as it can be, look for the energy star, as energy star products are the most efficient. Investing in a new roof can also give you up to $500 in tax credits.

3. Solar Panels

Solar panels and photovoltaic systems are smart, clean, and inexpensive products that can make up for their own cost in very little time. You can also receive huge tax breaks for installing a working solar panel system, or photovoltaic system. For installing either, you can receive a deduction for up to 30% of the total cost.

4. Fuel Cells

There is a consumer tax credit for installing fuel cell and micro-turbine systems, as long as they meet the government’s qualifications. The credit is for 30% of the total cost, up to $1,500 for each half kilowatt.

5. Bio-Diesel

Similarly to hybrid vehicles, you can reap huge benefits from driving a vehicle powered by bio-diesel. In fact, you can actually receive more federal benefits for having a bio-diesel vehicle than a hybrid, and some states even offer state tax breaks for bio-diesel powered cars.

6. Energy Efficient Appliances

There are dozens of tax incentives for a wide array of appliances for your home or office, as long as they were manufactured in the past 3 years, and meet “efficiency” qualifications. These appliances include, but are not limited to, dishwashers, refrigerators, and clothes washers.

7. Business Credits

You can get business tax credit for providing an earth-friendly work environment. Whether it means having one or more hybrid vehicles for company cars, or simply purchasing energy-saving appliances. You can also receive tax credits for having your office or business in a building that follows certain energy efficiency guidelines.

8. Wind Energy

You can receive a 30% tax credit for the cost of a wind energy system once you have installed it. You can also get up to $4,000 of additional credits depending on how many kilowatts of electricity you produce, at $500 for each half kilowatt.

9. New Windows

Purchasing double paned or energy efficient windows for your home will keep the cold air out and the warm air in. Likewise with the summer, your home will stay cool and comfortable with this impressive addition. Although you hardly need more incentive, installing energy efficient windows can also provide you with a tax credit of up to $200.

10. Plug-in Hybrids

Effective January 1, 2009, there will be a huge new tax incentive for the first 250,000 plug-in hybrid vehicle buyers. The buyers will receive a credit from $2,500 to $7,500 for both cars and trucks following the plug-in hybrid standards, depending on the capacity of the vehicle’s battery.