Energy Tax Credits

Thinking About Applying for an Energy Tax Credit?

Solar panels on a residential rooftopBefore purchasing and installing equipment to reduce your energy bills and your environmental footprint, check to see if any energy tax credits are available to offset some of the costs of the system and reduce the time needed to pay back your investment. For example, in the United States at the present time (2013), the federal government is subsidizing certain installations of Energy Star geothermal heat pumps, wind turbines, and solar panels by issuing a tax credit of 30% of the cost to purchase and install, with no upper limit to the credit. The federal energy tax credit program also includes an incentive for qualifying installations of fuel cells, providing a tax credit of 30% of the fuel cell’s cost, up to $500 for each .5kW of generation capacity, with a minimum capacity of .5kW of capacity.

Similarly, various state and local governments offer a number of tax credits for those willing to hunt for them and meet their qualification criteria. These tax credits are often applicable for major renewable energy projects such as new furnaces or heat pumps, as well as the more mundane projects such as weather stripping or installation of ventilation.

Giant windmills, part of a wind farmKeep in mind that you must meet all necessary criteria for the tax credit or incentive, and also keep in mind that those criteria change as the political and economic landscape changes. Make sure to sweat the details if you intend to claim a credit, and make sure to consult a knowledgeable tax adviser.

There are also incentives for those considering new construction, such as the home builder tax credit which was recently extended through 2013. If your new home is built according to the 2012 International Eergy Conservtion Code (IECC), it will be 30% better than the 2006 IECC, and should qualify for a $1,000 tax credit. If your new home is 50% more efficient than the 2006 IECC, you could get a $2,000 tax credit. You should also be aware that some states and municipalities have adapted modifications to the code, so be sure your construction meets any modified code elements necessary for the tax credit – but don’t forget to talk to that tax adviser.

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