The IRS has decided that hybrid vehicles qualify for a one-time "Clean Fuels" tax deduction of up to $2,000. If you’re paying the top 35% rate, that’s $700 off your bill. This deduction applies to hybrids bought in 2004 and 2005; it's scheduled to disappear for 2006. Don't let retirement sneak up on you. Create a perfect plan.

A number of new hybrids -- sedans, SUVs, even trucks -- are on the way. At least one of the new models is no more costly than its similarly sized, gasoline-powered kin. The choices:
So far, there are six models on U.S. roads:
Chevrolet Silverado Hybrid: $30,495 with automatic and air. 18 city/21 highway. This full-size pickup gets about 10% better economy than its regular version, plus contractors can use the battery pack to power tools. It does not qualify for the clean-fuels tax deduction.

Ford Escape Hybrid: $28,005 with all-wheel drive, automatic and air. 33 city/29 highway. So far, it's the only hybrid sport-utility, though entries from Toyota are expected in 2005.

Honda Insight: $21,870 with automatic and air. EPA rated at 57 mpg city/56 highway. A featherweight two-seater with limited cargo space and an enthusiastic community of drivers who report as much as 100 mpg on their daily commutes. Powered by a tiny, three-cylinder engine with an occasional assist from the batteries, which recharge by reclaiming the energy expended when you slow down or brake. Also available with a five-speed manual transmission.

Honda Civic Hybrid: $21,140 with automatic and air. 48 city/47 highway. Just like your neighbor’s Civic, but more expensive and a lot less thirsty. Same engine technology as the Insight, only the gasoline engine is bigger. Also available with a five-speed manual transmission.

Honda Accord Hybrid: $29,990 with automatic and air. 37 city/29 highway. Almost identical to an everyday V-6 Accord, but with a unique twist in that the power from its small electric motor is used primarily to boost performance.

Toyota Prius: $20,875 with automatic and air. 60 city/51 highway. Uniquely styled midsize sedan that, unlike the Hondas, can run off battery power alone at very low speeds, making it as quiet as a golf cart in the Safeway parking lot. Automatic only.
The Prius, redesigned for 2004, offers roughly the same interior space as Toyota's similarly priced Camry yet goes twice as far on a gallon of gas. In this case, every nickel saved on gasoline would truly be money in the bank.

Forgo an SUV and save a bundle
Whether or not the purchase of one of these fuel-sipping machines makes financial sense depends on the alternative. You'll save a small fortune if you opt for a hybrid over a larger sedan or sport-utility. Buy that Civic Hybrid instead of a 20-mpg Accord V-6 and you’ll see a savings of $656 a year on $1.50 gasoline, not to mention a few thousand on the purchase price. Commute in the hybrid rather than a 13-mpg sport-utility and you’d save $1,262, not to mention a tankful or two of guilt.

A Green World is on the way!