Toyota and Lexus Tax Credits for Hybrids Will Soon Be Cut in Half, and Disappear Entirely by October 2007
WASHINGTON, D.C. – Toyota Motor Corp. has hit the production limit — 60,000 — on vehicles eligible for a special tax credit designed to encourage more buyers to choose gas-electric hybrids. Toyota spokeswoman Martha Voss said that the automaker sold its 60,000th such vehicle in May.
WASHINGTON, D.C. – Toyota Motor Corp. has hit the production limit — 60,000 — on vehicles eligible for a special tax credit designed to encourage more buyers to choose gas-electric hybrids. Toyota spokeswoman Martha Voss said that the automaker sold its 60,000th such vehicle in May. That means tax credits for Toyota and Lexus hybrids will be cut in half for drivers who purchase their vehicles beginning in October, Voss said. The $3,150 credit for the Toyota Prius, the largest hybrid tax credit available, would be reduced to $1,575. Six months later, beginning next April, the tax credits will shrink to one-quarter of their original value. They will disappear by October 2007. Taxpayers could still claim a full tax credit for purchasing hybrids made by other manufacturers, such as Honda Motor Co., Ford Motor Co., and General Motors Corp., until those manufacturers trigger the credit limits or the tax break expires in 2011. The tax break lets buyers claim a credit worth up to $3,400 for purchasing new hybrids, but the law limited that tax credit to the first 60,000 vehicles that a manufacturer produces. After the manufacturer hits that limit, the full credit is available only through the next quarter. The credit then shrinks to half its value for six months, and then to one-quarter for another six months, before disappearing entirely. Toyota hybrid sales have outpaced other hybrid manufacturers. The IRS, which tracks hybrid production for taxpayers, certified that Toyota sold 41,779 hybrids from January through March this year. During the same period, Honda sold 9,072 hybrids and Ford sold 6,192. President Bush asked Congress to make all hybrid vehicles sold this year eligible for the tax break, one element of a proposal to reduce oil and gas consumption. Yet, Congress has yet to act on this proposal.
More Fuel

October Fuel Trends Show Diverging Gasoline and Diesel Prices
Get the latest fuel trends from October.
Read More →
Fuel Prices Surge in September | September Fuel Update
September brought major fuel price swings, including diesel crossing $6 a gallon. Here’s how gas and diesel prices changed throughout the month, and where they stood heading into October.
Read More →Turning Fleet Payment Data into Executive Insights
Ramel Lindsay of U.S. Bank Voyager discusses how fleets can transform payment and transaction data into actionable intelligence to reduce costs, improve oversight, and support executive decision-making.
Read More →
Why the IRS Raised Its Mileage Rate in the Middle of 2026
Fuel-price volatility drove the rare increase to 76 cents per mile, the fifth midyear adjustment since 2000.
Read More →
July Fuel Update: Prices Keep Rising in Light of More Conflict
Gas prices continue to rise as more and more conflicts do, too.
Read More →
Bob Adamsky on Fuel Volatility: "Don't Panic, Have a Plan."
When it comes to up and down fuel prices, Adamsky has a message for fleets: “Don’t panic.”
Read More →How Fleets Can Gain Control of Non-Fuel Spend
Fuel often gets the spotlight, but non-fuel expenses can have a major impact on fleet costs. Ramel Lindsay of U.S. Bank Voyager discusses how fleets can gain better visibility and control over these often-overlooked expenditures.
Read More →
Fuel is Just the Start: How Middle East Tensions are Driving Up Fleet Maintenance Costs
The Middle East conflict is doing more than pushing up fuel prices. It’s also raising the cost of key maintenance products your fleet depends on, from motor oil to tires to windshield wipers. Here’s what you need to know about this budget-busting situation.
Read More →
June Fuel Update: Prices Fall Below $4
Drivers are finally getting some relief at the pump. The national average gas price has dropped below $4 a gallon for the first time in months, with prices falling in 47 states as oil markets react to developments in U.S.-Iran negotiations.
Read More →
Study: How 2026's Gas Price Hikes Affect Different Vehicle Types
New data from iSeeCars reveals how rising fuel costs have affected different vehicle segments as gasoline prices climbed nearly 46% over the past four months.
Read More →