Buying a hybrid vehicle could provide a tax break

— -- Remember road trips? You piled all your friends in the car, rolled down the windows and drove until you got to the ocean, stopping only for a quick bite at a Waffle House. If you were older, you piled your family in the station wagon and drove to Grandma's, even if she lived in another time zone.

Sadly, road trips aren't much fun anymore. The average price of a gallon of gas rose to a near-record $3.22 a gallon Monday, and analysts expect prices to continue rising this spring and summer. That means many people can't afford to drive across town, let alone across the country.

Here's one way to lower your gas costs: Buy a more fuel-efficient car.

Saving on gas isn't the only benefit. If you buy a hybrid, which combines an electric motor with a gasoline engine, you may be eligible for a tax credit when you file your taxes next year.

Similarly, if you bought a hybrid last year, you may qualify for a credit on this year's taxes.

A tax credit is more valuable than a deduction because it represents a dollar-for-dollar reduction in your tax bill. In addition, you don't have to itemize to claim the hybrid tax credit.

But before you start shopping for a hybrid, it's important to understand that the amount of the credit can vary significantly. The credit is based on a formula that measures the vehicle's fuel economy and lifetime fuel savings.

Credits for IRS-certified hybrids range from $250 for the GMC Sierra to $3,000 for the Mazda Tribute. (You can find a complete list of hybrid tax credits at www.fueleconomy.gov.)

A vanishing credit

The hybrid tax credit was designed to offset the higher cost of a hybrid compared with a conventional vehicle. An increase in the number of hybrids has caused that premium to shrink. Unfortunately, for some hybrids the tax credit is shrinking, too. Your tax credit could be reduced or eliminated if:

•You buy a popular hybrid. Once a manufacturer has sold 60,000 hybrid vehicles, the tax credit for buyers of its hybrids gradually phases out and eventually disappears.