The Internal Revenue Service has certified the 2005 Toyota Prius as being eligible for the clean-burning fuel deduction. The certification means taxpayers who purchase a new Prius may claim a tax deduction of $2,000 on Form 1040.
   Federal tax law allows individuals to claim a deduction for the incremental cost of buying a motor vehicle that is propelled by a clean-burning fuel. By combining an electric motor with a gasoline-powered engine, these hybrid vehicles obtain greater fuel efficiency and produce fewer emissions than similar vehicles powered solely by conventional gasoline-powered engines.
   The IRS previously certified the Prius for model years 2001, 2002, 2003 and 2004, as well as the Honda Insight for model years 2000, 2001, 2002, 2003 and 2004 and Honda Civic Hybrid for model year 2003 and 2004.
   Under the Working Families Tax Relief Act of 2004, the clean-burning fuel deduction is up to $2,000 for certified vehicles first put into service in 2004 and 2005. The deduction will be limited to $500 for vehicles placed in service in 2006 with no deduction after that.
   The one-time deduction must be taken in the year the vehicle is originally used. The taxpayer must be the original owner and take the deduction as an adjustment to income on Form 1040. It’s not required to itemize deductions to claim it.