Customers who purchase a new 2007 Honda hybrid or natural gas vehicle may be eligible for federal tax credits ranging from $1,300 to $4,000 when they file their tax returns for the year in which it was purchased, American Honda Motor Co., Inc., announced today.

The announcement is the result of a ruling by the Internal Revenue Service (IRS), which calculated the tax credits based on the Energy Policy Act of 2005 passed by Congress last year. Honda’s 2007 Civic Hybrid, Civic GX and Accord Hybrid are all eligible for the federal government’s tax credits.

The federal tax credits are as follows:

2007 Civic Hybrid - $ 2,100

2007 Accord Hybrid - $ 1,300

2007 Civic GX - $ 4,000

Additionally, buyers of the natural gas vehicle home refueling appliance named “Phill” are also eligible for up to a $1,000 tax credit. Phill allows consumers to refuel their natural gas Civic GX from home at a much lower fuel cost than gasoline.

Various limitations to the credit may apply, depending on the specific circumstances of the customer, and Honda is encouraging customers to contact the IRS or a tax advisor to determine if and how the tax credit will apply to their vehicle acquisition. Customers are also encouraged to contact the IRS at www.irs.gov for information on hybrid and natural gas tax credit amounts applicable to Honda’s new 2005 and 2006 model year hybrids and natural gas vehicles purchased during 2006.

“The federal tax incentives reward consumers who seek the highest levels of environmental performance from their vehicles,” said John Mendel, senior vice president of American Honda. “Honda continues to be a leader in producing vehicles that set the standard for fuel economy and low emissions.”

Honda was the first automaker to sell a hybrid vehicle in the U.S. with the Insight in December 1999. It launched its second hybrid vehicle, the Civic Hybrid, in March 2002, followed by the first-ever V6-powered hybrid, the Accord Hybrid, in December 2004. Additionally, Honda announced that in 2009 it will introduce another hybrid model priced below the Civic Hybrid.

Honda is currently the only manufacturer to market a natural gas passenger car nationally to fleet operators and to consumers in the states of California and New York. The home refueling appliance, “Phill” can also be purchased in conjunction with the natural gas powered Civic GX at certain California and New York Honda dealers.

Are you considering buying a hybrid car?

Maybe you’re tired of paying high prices at the gas pump or sending U.S. dollars to the Middle East. Or you could be concerned about the environment and the fact that oil is a depleting resource - one that definitely won’t last forever.

Well, whatever your reasons are for looking in hybrids, fuel economy is not the only thing you need to consider. You also need to take a look at the final purchase price, the tax benefits and the cost of insurance, repairs and maintenance.

Fuel Consumption

Hybrids get much better mileage than conventional gasoline vehicles, but you should remember that the average driver gets only about 75% of the fuel consumption estimates given for a new car.

In a recent rating of fuel efficient automobiles 3 hybrids came out on top:

1. Honda Insight 60 mpg city, 66 mpg highway
2. Toyota Prius 60 mpg city, 51 mpg highway
3. Honda Civic Hybrid 49 mpg city, 51 mpg highway

Purchase Price

Hybrids do come with a higher sticker price than similar gas models. In most cases the extra cost is somewhere between $1500 and $3000. Manufacturers do say that the price of hybrids will come down in the future as they ramp up their production.

Tax Benefits

For many buyers, state and federal tax benefits can reduce or sometimes even eliminate the extra cost of buying a hybrid car. Check with your car dealer - they’re up-to-date on the latest in tax benefits and rebates.

Insurance and Other Costs

Hybrid cars can qualify for car insurance discounts from many insurance carriers. Some are now giving 5% to 10% discounts for hybrid drivers. That can be a significant discount.

Something to keep in mind is that repair costs on hybrid cars may be more expensive than conventional gas powered vehicle repairs. Not many local mechanics have the training or tools to handle the new hybrids, so you’ll have to return to the dealer for service and maintenance. That situation is likely to change as hybrids become more maintstream.

One maintenance item that you’ll save money on is brake pads. Since hybrids us a regenerative braking technology, their brake pads last much longer. Prius customers have reported driving as far as 85,000 miles without a replacement. Most gas car brake pads last about 15,000 miles.

The warranties on most hybrids are generous - probably to help people overcome their fear of something new. Toyota, Honda and Ford all offer at least 8 to10 year warranties on hybrid-specific components. Toyota, for example, reports their battery back will last for more than 180,000 miles. That would be over twelve years of driving for the average car owner.