Some federal tax breaks for energy efficient hybrids will start shrinking this fall.

Toyota Motor Corp. has hit its production limit -- 60,000 vehicles -- on cars eligible for a special tax credit designed to encourage buyers to choose gas-electric hybrids.

In a statement, Toyota announced it had sold its 60,000th vehicle in May. Beginning in October, the tax credits for Toyota and Lexus hybrids will be cut in half for drivers who purchase the vehicles. As an example, the company said the $3,150 credit for the popular Toyota Prius, the largest hybrid tax credit available, would shrink to $1,575. In April 2007, the credits will shrink to one-quarter of their original value and by October 2007, the will disappear entirely.Hybrids account for a very small percentage of the market, but they have grown in popularity over the past year. Taxpayers can still claim a full tax credits for purchasing hybrids made by other manufacturers, such as Honda Motor Co., Ford Motor Co. and General Motors Corp. Those manufacturers' production levels have yet to trigger credit limits, though the tax break expires regardless in 2011. The tax break lets buyers claim a credit worth up to $3,400 for purchasing new hybrids.

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