The state and federal government are helping with tax
deductions and credits. Utility companies can help with
programs — because conservation is cheaper than building
new power plants.
Upgraded energy-efficient homes are differentiated: fresher, greener, less
expensive to operate and a more valuable living (and selling!)
environment. Experience often shows they may return a higher
value on the market, with a quicker sale.
Note: There are also incentives for stepping beyond the energy remedies suggested – buying Energy Star appliances also kicks
incentives year round.
FEDERAL INCENTIVES FOR RESIDENTIAL ENERGY EFFICIENCY. Consult a tax professional
The new "Recovery Act" extends the consumer tax benefits for another year,
triples the total available tax credit from $500 to $1,500; and increases the tax
credit to 30 percent of the cost of each qualified energy efficiency improvement.
The law also removes the cap on geothermal heat pumps and solar water
heaters through 2016.
Consumers who employ energy-efficient products in their homes or drive fuel efficient
vehicles enjoy multiple benefits. At home, these benefits include lower
home energy bills, increased indoor comfort, and reduced air pollution, as well
as tax incentives.
In addition to helping savvy consumers lower their energy bills at home, the energy-efficient products eligible for the new federal tax credit incentives
actually lower the amount of federal income taxes that these taxpayers must pay
What is a tax credit? You don’t receive an income tax credit when you buy the
product, like an instant rebate. You claim the credit on your federal income tax
form at the end of the year.
Tax credits vs. tax deductions: In general, a tax credit is more valuable than a
similar tax deduction. A tax credit reduces the tax you pay, dollar-for-dollar. Tax
deductions – such as those for home mortgages and charitable giving – lower
your taxable income.
Go to www.dsireusa.org, the up-to-date database of federal and state tax incentives and rebate programs for energy efficiency and renewables. DSIRE is funded by the U.S. Department of Energy and the Interstate Renewable Energy Council.
If there are further questions regarding federal, state or utility company incentives, please feel free to consult an accountant at
Smith Patrick LLC CPAs.