Are Tax Breaks and Incentives Currently Enough To Make Hybrid Cars Worth the Money?
The federal government offers incentives to encourage the purchase of electric vehicles. An EV tax credit is money you get back from the government after purchasing a qualifying vehicle, but is it worth it?
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A range of hybrid vehicles are available on the market today. Progressive reported that you’ll likely spend thousands of dollars more than a comparable gas car, but you will save on gas as you own the vehicle and on federal and tax incentives.
According to iSeeCars.com, the average starting price for a hybrid car is $33,214, but there are lower-priced options. The 2024 Toyota Corolla Hybrid, based on iSeeCar.com’s affordability ranking of 10 hybrid cars, currently has a starting MSRP of $23,500 brand new.
Federal tax credits for plug-in electric vehicles and fuel cell electric vehicles purchased in 2023 or after may be eligible for a federal income tax credit of up to $7,500 for new vehicles and up to $4,000 for used vehicles. However, there are strict rules for 2024 as to what qualifies for the credit. According to Cars.com, new rules cut the number of new EVs and PHEVs that qualify by more than half on Jan. 1, but more vehicles will join the list throughout the year as automakers change battery sourcing.
Per IRS regulations, the federal new clean vehicle and used clean vehicle tax credits became available at the point of sale at car dealerships at the start of 2024. This means participating dealers give consumers an immediate discount on the EV’s purchase price instead of waiting to file their annual tax returns to get the tax break.
According to Car and Driver, maintaining a hybrid car is also a lot like maintaining a gas one, although replacing a hybrid’s battery pack is costly. RepairPal estimated the cost of parts and labor for a new battery in a 2024 Prius is between $3,000 and $5,000, but purchasing a battery pack for an out-of-warranty hybrid may exceed the vehicle’s value.
Car and Driver noted that whether a hybrid is worth it all comes down to personal preference. From a cost perspective, many hybrid vehicles do pay back their price premiums over the span of a few years.
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