Federal tax credit up to $3,400!
Some diesels purchased or placed into service after December 31, 2005 may be eligible for a federal income tax credit of up to $3,400. (No eligible vehicles were manufactured for sale until 2008.)
Credit amounts begin to phase out for a given manufacturer once it has sold over 60,000 eligible hybrid and diesel vehicles.
Vehicles purchased after December 31, 2010 are not eligible for this credit. The information below is provided for those filing amended tax returns for previous years.
| Vehicle Make & Model | Full Credit | Phase Out | No Credit | |
|---|---|---|---|---|
| 50% | 25% | |||
| Audi | Jan. 1, 2006 | July 1 - Dec. 31, 2010 | Not Applicable | Jan. 1, 2011 |
 2010-11 Audi A3 2.0L TDI |
$1,300 | $650 | -- | $0 |
 2011 Audi Q7 3.0L TDI (automatic) |
$1,800 | $900 | -- | $0 |
| 2009-10 Audi Q7 3.0L TDI |
$1,150 | $575 | -- | $0 |
| Vehicle Make & Model | Full Credit | Phase Out | No Credit | |
|---|---|---|---|---|
| 50% | 25% | |||
| BMW | Jan. 1, 2006 | TBD | Not Applicable | Jan. 1, 2011 |
 2009-11 BMW 335d Sedan |
$900 | -- | -- | $0 |
 2009-11 BMW X5 xDrive35d |
$1,800 | -- | -- | $0 |
| Vehicle Make & Model | Full Credit | Phase Out | No Credit | |
|---|---|---|---|---|
| 50% | 25% | |||
| Mercedes-Benz | Jan. 1, 2006 | TBD | Not Applicable | Jan. 1, 2011 |
 2011 Mercedes-Benz E350 BlueTEC |
$1,550 | -- | -- | $0 |
 2010–11 Mercedes-Benz GL 350 BlueTEC |
$1,800 | -- | -- | $0 |
 2010–11 Mercedes-Benz ML 350 BlueTEC |
$900 | -- | -- | $0 |
| 2010–11 Mercedes-Benz R 350 BlueTEC |
$1,550 | -- | -- | $0 |
 2009 Mercedes-Benz GL 320 BlueTEC |
$1,800 | -- | -- | $0 |
 2009 Mercedes-Benz ML 320 BlueTEC |
$900 | -- | -- | $0 |
 2009 Mercedes-Benz R 320 BlueTEC |
$1,550 | -- | -- | $0 |
| Vehicle Make & Model | Full Credit | Phase Out | No Credit | |
|---|---|---|---|---|
| 50% | 25% | |||
| Volkswagen | Jan. 1, 2006 | July 1 - Dec. 31, 2010 | Not Applicable | Jan. 1, 2011 |
 2010-11 Volkswagen Golf 2.0L TDI (automatic) |
$1,700 | $850 | -- | $0 |
| 2010-11 Volkswagen Golf 2.0L TDI (manual) |
$1,300 | $650 | -- | $0 |
 2009-11 Volkswagen Jetta 2.0L TDI Sedan |
$1,300 | $650 | -- | $0 |
 2009-11 Volkswagen Jetta 2.0L TDI SportWagon |
$1,300 | $650 | -- | $0 |
 2011 Volkswagen Touareg 3.0L TDI (automatic) |
$900 | $450 | -- | $0 |
| 2009-10 Volkswagen Touareg 3.0L TDI |
$1,150 | $575 | -- | $0 |
Updated Feb. 28, 2011.
Sources:
2011 Advanced Lean-Burn Vehicles, IRS, Oct. 28, 2010.
Qualified Advanced Lean-Burn Technology Vehicles, IRS, April 9, 2009.
2010 Advanced Lean-Burn Vehicles, IRS, May 26, 2010.
Additional Requirements
more...The following requirements must be met to claim the credit:
- The original use of the vehicle commences with the taxpayer.
- The vehicle is acquired for use or lease by the taxpayer, and not for resale. (The credit is only available to the original purchaser of a new, qualifying vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.)
- For qualifying vehicles used by a tax-exempt entity, the person who sold the qualifying vehicle to the person or entity using the vehicle is eligible to claim the credit, but only if the seller clearly discloses in a document to the tax-exempt entity the amount of credit.
- The vehicle is used mostly in the United States.
- The vehicle must be placed in service by the taxpayer after December 31, 2005 and must be purchased on or before December 31, 2010.
- Click here for more about the credit phase-out and ending date
Note: Prior to 2009, the Alternative Motor Vehicle Credit could not be used to offset the alternative minimum tax (AMT). However, beginning in 2009, the credit can be applied against the AMT.
Phase Out & Termination
more...The credit begins to phase out for a manufacturer's vehicles once it sells a total of 60,000 eligible hybrid and diesel vehicles starting from January 1, 2006. IRS will announce when a manufacturer exceeds this sales figure.
In addition to the phase out rules, any vehicle purchased after December 31, 2010 will not be eligible for the credit.
Claiming the Credit
more...Fill out Form 8910, Alternative Motor Vehicle Credit.
For diesels acquired for personal use, report the credit from Form 8910 on the appropriate line of your Form 1040, U.S. Individual Income Tax Return.
DISCLAIMER
The information on this page should not be viewed as an official or legally binding document. Other requirements or exceptions may apply. For more detailed information, please consult an IRS tax representative and/or official IRS publications.