You can get tax breaks these days for leaner and cleaner energy usage. Many states have joined the federal government in offering generous incentives. How to save the most…
Between the Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009, energy-focused federal tax breaks abound. Even taxpayers who owe the alternative minimum tax (AMT) can claim the breaks. There are no income caps for eligibility.
Residential energy credits. You can get a 30% tax credit for energy-efficient home installations in 2009 and 2010. The maximum credit is $1,500 for either year or both years combined.
Result: If you spend $5,000 on certain “residential energy” items this year or next, you’ll save $1,500 on your federal tax bill. Eligible purchases include insulation, metal roofs coated with heat-reflective material and energy-efficient windows, doors and skylights.
Residential power credits. You also can get a tax credit of up to 30% of the cost for buying and installing equipment designed to power, heat and cool your home efficiently. Eligible items include solar water-heating and photovoltaic (power-generating) equipment, small wind turbines and geothermal heat pumps for home heating, home cooling and water heating.
There generally is no limit on these residential energy-efficiency tax credits, except for a $500-per-half-kilowatt cap on tax credits for fuel cells used to supply electricity. For more information, visit www.energystar.gov and click on “Tax Credits for Energy Efficiency.” Also visit the Alliance to Save Energy site, www.ase.org.
Vehicles. Tax credits are still available on hybrid vehicles produced by Ford, GM and a few other manufacturers, such as Mazda and Nissan. Credits for various hybrids typically range from $975 to $3,000. For exact amounts of tax credits, go to the IRS Web site, www.irs.gov, and search for “hybrid vehicle credit.”
You also can get a tax credit of up to $4,000 for buying a Honda Civic GX, which isn’t a hybrid but runs on compressed natural gas. For more information, visit www.fueleconomy.gov.
What’s more, tax credits will be available on plug-in electric vehicles — which get power from the electricity grid — when they eventually come to the market, possibly in late 2010 or early 2011. For plug-ins, the tax credit will range from $2,500 to $7,500, depending on factors such as battery capacity.
States also provide tax incentives for purchasing alternative-fuel vehicles and making energy-efficient home improvements. States with exemplary programs…
Colorado, Louisiana and South Carolina provide their own tax credits for alternative-fuel vehicles. Even more states offer tax reductions or exemptions whenever you fill up with alternative fuels.
Connecticut’s residents owe no sales or use taxes when they purchase solar energy electricity-generating systems, compact fluorescent lightbulbs or residential weatherization products.
Massachusetts, Minnesota, New Jersey, New York and Wyoming exempt certain solar- and wind-powered equipment from sales and use or property tax.
Georgia, North Carolina, Texas, West Virginia and Missouri offer “sales tax holidays” for energy-efficient purchases.
Missouri allows residents to deduct the costs of qualified home-energy audits and related recommendations from federal adjusted gross income when computing state income tax.
Details: Visit the Database of State Incentives for Renewables & Efficiency at www.dsireusa.org.