WASHINGTON, D.C. – An effort is underway to provide a tax credit for hybrid vehicles and other environmentally friendly vehicles following passage of a wide-ranging tax bill by the U.S. House of Representatives June 17, reported the Detroit News. The tax credit proposal for hybrid vehicles was passed by the U.S. Senate in May as part of a wide-ranging package of corporate tax breaks. Although the House left the hybrid vehicle tax credit out of its version of the bill, carmakers and supporters believe it will be restored in conference committee, according to the Detroit News.

Under the Senate plan, consumers would receive a tax credit of up to $1,000 for hybrid gasoline-electric-powered vehicles and $4,000 for fuel-cell vehicles, which are under development but not in the retail market yet. Diesel-powered vehicles were not included. The newspaper said an existing clean-fuels tax deduction will be phased out after 2006 without reauthorization from Congress. Under the program, the IRS allows a $1,500 deduction for hybrid cars but, next year, the deduction will drop to $1,000. Critics of the tax credits reportedly said long waiting lists for the Toyota Prius show that the market for hybrids is doing just fine without help from the government.

Originally posted on Fleet Financials