Saturday, August 27, 2005
Tax credit (2006) vs tax rebate (2005)??
PriusChat -> tax credit (2006) vs tax rebate (2005)??: "If you buy a MY2005 Prius in 2005 there's a one time tax deduction of $2,000 for 2005 tax year.
Note that a tax deduction will reduce your taxable gross income whereas a tax credit (ie the one being discussed for 2006) can be subtracted from what you owe in taxes. That is, a dollar for dollar reduction in your owed taxes.
So, if in 2005 you take the $2000 and you're in the 30% tax bracket you save $600 in owed taxes. In 2006 when you take the $3,100 tax credit you save $3,100 in owed taxes. Tht's a $2,500 difference which buys approx 1,000 gallons of regular gasoline. At 60 mpg that translates to 60,000 miles for free (well almost free).
The 2006 tax credit (if it indeeds becomes effective) is a very good deal."
Note that a tax deduction will reduce your taxable gross income whereas a tax credit (ie the one being discussed for 2006) can be subtracted from what you owe in taxes. That is, a dollar for dollar reduction in your owed taxes.
So, if in 2005 you take the $2000 and you're in the 30% tax bracket you save $600 in owed taxes. In 2006 when you take the $3,100 tax credit you save $3,100 in owed taxes. Tht's a $2,500 difference which buys approx 1,000 gallons of regular gasoline. At 60 mpg that translates to 60,000 miles for free (well almost free).
The 2006 tax credit (if it indeeds becomes effective) is a very good deal."
# posted by Donn Lee @ 11:45 AM 
