As of Jan. 1, 2009, Honda hybrids like the Civic or Insight are no longer eligible for the Alternative Motor Vehicle Credit from the federal government.
The federal government put a production cap on the number of hybrid vehicles a manufacturer can produce and qualify for the credit. As Honda produced more hybrids it became closer to the allowed production number; the Civic’s credit was cut from $2,100 to $1,050, then to $525 before it disappeared. The Insight never qualified for a credit because it wasn’t available before the first of the year.
A tax deduction is available on the Insight hybrid and all new cars purchased this year. The deduction, which was issued to stimulate new car buying, allows you to subtract sales and excise taxes on any new car purchase from your 2009 federal income taxes.
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Unless I am wrong, the deduction is only good on cars purchased after Feb 16.