Tax breaks given on gas-guzzling SUVs

FEB. 18 9:17 P.M. ET New tax breaks are available to anyone who wants to help the environment by purchasing fuel-efficient hybrid vehicles. But if owners of small businesses really want to save money, they can get even bigger federal tax breaks by buying the largest gas-guzzling SUVs.

The disparity is drawing criticism from environmentalists and the Republican chairman of the Senate’s tax-writing committee, who is working on a change. Dealers and owners who have benefited from the SUV tax incentive say it helps spur a key part of the economy — auto-making — and allows small business owners to purchase vehicles that improve their bottom line.

Federal tax rules that took effect last month allow a credit of up to $3,150 for anyone buying a hybrid car. The credit is the same regardless of tax bracket.

However, owners of small businesses who buy a Hummer, Ford Excursion or other SUV weighing more than 3 tons get a deduction of up to $25,000 — depending on tax bracket — if they use the vehicle exclusively for work.

Business Week