Hybrid Tax Credit: 2010 Ford Fusion and Mercury Milan Highest

Boosting mpg is one thing, but just in time for tax season, the 2010 Ford Fusion and Mercury Milan promise to boost your rebate, too.

To the Ford Fusion hybrid’s list of highs—mpg, style, and fun factor in a hybrid—add one more: tax credit. Ford has announced that the hybrid Fusion and its mechanical twin the Mercury Milan qualify for the nation’s highest hybrid-vehicle tax credit, $3400.

But there’s a catch, and a well-timed one at that. Tax credits only apply to the first 60,000 hybrid vehicles sold by a manufacturer after January 1, 2006. Ford sold its 60,000th hybrid in the fourth quarter of 2008, and tax-credits have half-lives.

Therefore, beginning in the second quarter of 2009 (April 1), the Fusion hybrid tax credit will be reduced by half, to $1700, and by half again, to $850, in quarter three (starting October 1).

Honda and Toyota surpassed the 60,000-vehicle mark long ago and have already run through their draw-down periods, so buyers of their hybrids are no longer eligible for tax credits.

After April 1, 2010, there will be no tax credit on hybrid Fords, either. So if you were debating when to buy that hybrid Fusion, consider that buying before tax time this year will increase your credit substantially.

Buying the Fusion hybrid at the full tax credit also makes for an interesting comparison to the standard Fusion. Starting at $27,995, the hybrid’s standard-equipment roster is nearly identical to the $24,700 Fusion SEL’s.

The hybrid’s four-cylinder is a little down on power compared to the SEL’s, but the electric motor keeps them close in the stop-light drags, and who’s drag-racing hybrids, anyways?

Subtract the hybrid’s tax credit and it sells for $24,595, making the only real reason to buy an SEL in the next two months a serious lust for leather. Which we understand. It’s the same story for the Milan hybrid.