Hey Oleg, there’s more to consider.

In addition to fuel saving costs and lower emissions there is another benefit to switching to a hybrid vehicle. If you buy one this year you can claim a $1,500 deduction on your 2004 tax return, down from $2,000 for hybrids purchased in 2003. Next year, the deduction will drop to $1,000, and it’s scheduled to fall to $500 in 2006. It’s also important to note that because it’s a deduction the actual value varies, if you’re in the 33% tax bracket, a $1,500 deduction will reduce your tax bill by $495. If you’re in the 15% tax bracket, it’s worth $225.

Beyond the federal tax deduction many states also offer tax breaks. Colorado, for example, offers tax credits of about $3,000 on some models of hybrid cars. If you live in New York State you are eligeable to recieve a state income tax credit of $2,000, plus a partial refund of your sales tax.

It is important to note, that this is a tax credit, which is more valuable than a deduction because it provides a dollar-for-dollar reduction in your tax bill. So depending on where you live, after a year you could stand to cancel out the premium cost of a hybrid vehical thanks to fuel savings and tax reprieve. After that you can start saving money on fuel costs. Don’t forget your numbers assume that gas prices don’t rise anymore.