Making energy-conscious purchases will provide tax benefits when it comes time to fill out your tax return. These credits can provide significant savings by reducing the amount of income tax you pay. For more information, visit www.irs.gov.
February 17, 2009: Congress passed an economic stimulus package to promote energy efficiency. The American Recover and Reinvestment Tax Act of 2009 includes several provisions modifying and expanding the scope of energy efficiency and renewable energy incentives.
• Home Improvements
Tax credits up to $1,500 are available for home envelope improvements related to insulation, replacement windows, water heaters, and certain high efficiency heating and cooling equipment.
o Tax Credits for Energy Efficient Homes & Products
o Weatherization of Existing Homes
o Heating & Cooling Systems and Water Heaters
• Efficient Cars
Hybrid vehicles are better for the environment, and that's worth rewarding. Consumers may claim the full amount of the credit up to the end of the first calendar quarter. The credit will be phased out in the second calendar quarter after the manufacturer sells 60,000 hybrid vehicles.
• On-Site Renewables
Solar panels, water heating systems, small wind systems, and geothermal heat pumps are eligible for a tax incentive worth 30 percent of the total cost, without a cap.
• Fuel Cell Power Plants
A qualified fuel cell power plant converts fuel into electricity using electrochemical means, has an electricity-only generation efficiency of more than 30 percent, and generates at least 0.5 kilowatts of electricity. This tax credit covers 30 percent of the purchase price, not to exceed $500 for each .5 kilowatt of capacity.
An eligible contractor who builds a new energy efficient home may qualify for a tax credit of up to $2,000. The home must achieve 50 percent energy savings on heating and cooling. At least 1/5 of the energy savings must come from building envelope improvements. The home qualifies for the credit if:
• It is located in the United States.
• Construction is substantially completed after August 8, 2005.
• It meets statutory energy saving requirements.
This credit also applies to contractors of manufactured homes conforming to Federal Manufactured Homes Construction and Safety Standards.
A tax deduction of up to $1.80 per square foot is available for owners/designers of new and existing commercial properties who are saving at least 50 percent on heating and cooling costs. Partial deductions of up to $0.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems.