Without federal tax credits, the Honda Civic Hybrid, which costs about $4,800 more than the Civic LX non-hybrid, wouldn't pay off for its owners until the seventh year of driving, according to Consumer Reports.
But with a $525 tax credit factored in, buyers will see a financial gain - but just barely - in the first year of ownership. Owners will save about $5 a year, on average, according to Consumer Reports' analysis. For practical purposes, one could call that breaking even.
Tax credits on Honda hybrid vehicles have been reduced since Honda Motor Co. sold its limit of 60,000 qualifying vehicles. After the end of 2008, there will be no credits at all on Honda hybrid vehicles.
Also, because of "alternative minimum tax" rules, not all hybrid vehicle buyers will get the full tax credit, even if they buy a qualifying vehicle and don't have to pay the AMT. If you're factoring in tax credits before deciding to buy a hybrid vehicle, check with an accountant first.
NEXT: Loser: Toyota Highlander Hybrid
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