Review of the Energy Tax Credit Plans
Overview and Backgound
The US federal government grants a federal solar energy tax credit (also applicable to wind turbines), and the different states grant Energy Tax Rebates to encourage homeowners to invest in renewable clean energy that will gradually replace the energy produced by burning fossils. Similar tax incentives are provided in Canada.
A second category are tax credits on investments in home energy improvements. Both categories are detailed in the paragraphs bellow.The tax benefits are available only through tax year 2016!
The Window of Opportunity for the Federal Energy Tax Credit
The reasons for this generosity stem from an ambition to achieve the following goals:
- Reduce the carbon footprint and mitigate the adverse effects of global warming
- Minimize the nation dependency on imported oil from politically unstable regions
- Generating more jobs in the US related to clean energy (R&D, manufacturing, installation, maintenance, education)
This is a window of opportunity for you to exploit (The IRS tax credit is valid through 2016)
The solar tax credit is substantial and make your out of pocket Capital Expense more manageable and the Return on your Investment period much shorter.
View my page on energy financing to see the entire financial picture.
The Federal Energy Tax Credit Plans
The IRS provides the following energy tax incentives. I restrict myself to residential property (or home owners in other words)
Solar Water Heaters and Solar Electric Panels
Investments related to residential energy efficiency improvements
On investments that improve the home energy efficiency such as better furnaces, building insulation, doors and windows insulation, roof insulation a biomass furnace, etc.), the tax credit was 30% limited to 1,500$ in 2009 and 2010 combined.
As of January 2011, it is only 10%, limited to $500, on approved items only).
For more information on home energy improvements ideas click here
You may correctly assume that there are constraints and conditions for getting the tax credits. You are encouraged to consult your tax consultant
Stimulus Energy Tax Credit for windows, doors and skylights
(nicknamed 1500 energy tax rebate
On February 17th 2009, the president signed into law the American and Reinvestment Tax Act of 2009. This bill modified the tax rebate on purchasing Energy Star windows, doors and skylights to 30% of what was purchased up to a limit of $1,500. click here to view more details, updated to include the January 2011 changes, view the 1500 energy tax credit page
Canada Energy Tax Plans
Canada and the different provinces/territories have Energy Tax Incentives and Rebates plans.
Click to view this link that contains background on the Canadian energy tax incentives.
Also, you may find that this Canadian tax software is useful in helping to find all the deductions you may be eligible for this tax season.
States Level Tax Incentives
Each state has a different incentives’ package, therefore I’ll build up gradually a list of what is available in the different states.
Texas Energy Tax Credits
The state of Texas doesn't have a tax rebate program. These utilities do have tax rebate programs:Austin Energy - Solar PV Rebate Program, Austin Energy - Solar Water Heating Rebate, Bryan Texas Utilities - Solar Hot Water Rebate Program, Bryan Texas Utilities - Solar PV Rebate Program, CPS Energy - Solar Hot Water Rebate Program, CPS Energy - Solar PV Rebate Program, Farmers Electric Cooperative - Residential/Agricultural Energy Efficiency Rebate Program, Guadalupe Valley Electric Cooperative - Renewable Energy Rebates, Oncor Electric Delivery - PV Incentive Program, Oncor Electric Delivery - Solar Water Heating Incentive Program
A very important consideration for a Texas homeowner is how to choose the Retail Electricity Provider (REP).
Please view my page on Texas Electricity Rates
Energy Star Appliances
The purchasing of energy star appliances does not entitle the purchaser to claim a tax deduction. However, new cash rebates are granted as of April 2010 for replacing old appliances with new Star Energy Rated Aplliances. Click here to view my page on the new cash for appliances rebate program
New Cars Tax Credit
Until November 1st 2010 you might exploit the new cash for clunkers bill to buy a new fuel efficient car
Talking about new cars, view my page on hybrid car tax credit
For other states click here to view a good updated data base
click here to return from the tax credit page to my Home Page