Home energy tax credits can save you thousands
(Photo: Ivars Zolnerovichs / iStockPhoto)
When Congress passed the financial bailout bill late last year, it included a range of federal tax credits and cash gifts for businesses — but also a suite of new and renewed tax credits for individuals who want to make energy efficiency and renewable energy improvements to their home or cars.
When President Obama signed the economic stimulus bill in February, the federal government expanded and extended some of those credits.
So what's in it for homeowners and other regular taxpayers? There are several important provisions anyone can take advantage of (changes made by the economic stimulus bill are in bold):
$1,500 Home Tax Credits for Energy Efficiency
You can claim a home tax credit for energy efficiency improvements made in 2009 (but not for improvements made in 2008) if you installed new insulation, energy-efficient windows, or an energy-efficient furnace, boiler, or air conditioner.
A tax credit of up to $500 that expired in 2007 has been renewed for 2009 by the bailout bill, and expanded to $1,500 by the economic stimulus bill. It covers up to 30% (expanded from 10% by the economic stimulus bill) of the cost of a range of projects that meet certain specifications. Do $5,000 worth of qualifying work, and you not only get a $1,500 rebate, but also savings on energy bills for years to come. (Get more ideas for money-saving home energy efficiency improvements with The Daily Green's 19 Tips to Winterize Your Home feature.)
The economic stimulus bill also stripped out most caps on individual home improvements, which had applied to windows, heating equipment, and other energy efficiency improvements.
Note that the tax credit applies only to equipment, not labor.
Find more information about these home energy efficiency tax credits at the Alliance to Save Energy, Energy Star, or Department of Energy websites. Note that much of this information reflects the tax incentives in place in 2006 and 2007; for the most part, the 2009 tax credits are identical, but check updated criteria for which products qualify, for instance.
$2,000 or More in Home Energy Tax Credits for Geothermal Pumps, Solar Energy Systems, Wind Turbines, or Fuel Cells
The economic stimulus bill removed the $2,000 cap that had applied to geothermal heat pumps, leaving in place the 30% tax rebate on qualified solar energy systems, geothermal heat pumps, small wind turbines, and fuel cell systems. Install all four and that's $8,000!
Ground-source heat pumps are installed underground and use the constant 50-degree subsurface temperature to cool air or water in the summer, and heat it in the winter — both of which reduce the cost of heating or cooling year-round.
The solar energy tax credit is now good through 2016. (See The Daily Green's Home Solar Panel Reviews: The Most Efficient and Best-Value Home Solar Panels.)
$500 Home Energy Tax Credits for Fuel Cells or Microturbines
The tax incentive that had covered 30% of the cost of fuel cell or microturbine systems in homes, which lapsed in 2008, has been restored for 2009 and through 2016. It covers up to $500 per 0.5 kW of capacity.
$7,500 Energy Tax Credits for Plug-in Hybrid Cars
The first 200,000 buyers of plug-in hybrid vehicles from each manufacturer now qualify for a $7,500 tax rebate.
A similar tax credit for hybrid vehicles had been capped at $3,500 before the bailout bill.
$2,500 for Plug-in Electric Motorcycles, or Low-Speed or Three-Wheeled Vehicles
The economic stimulus bill established a 10% tax credit through 2011 with a cap of $2,500 for new electric plug-in motorcycles, and low-speed and three-wheeled vehicles. There's also a 10% tax rebate and a $4,000 cap for converting an existing vehicle to a plug-in.
$50,000 for Installing a Clean-Fuel Refueling System
While few homeowners may be ready to take advantage, those who want to install a clean-fuel refueling system, like a natural-gas refueler or a charging system for a plug-in electric vehicle, can now qualify for up to $50,000 — up from $30,000 — if the system is installed in 2009 or 2010, thanks to the stimulus bill. Go with hydrogen and the credit increases to $200,000, and you have until 2014 to take advantage of it.
Wildcard: State Energy Tax Credits
Keep your eyes out for new incentives from your state, since the bill also authorizes an $800 million government bond program that encourages states to create incentives for new and existing energy conservation and related programs. Some of that money is likely to be used toward state tax breaks and other incentives that will vary by location.
Among the incentives to watch for is up to $6,500 per qualifying home in the Weatherization Assistance Program. The Department of Energy's Office of Renewable Energy and Energy Efficiency, which provides grants to states and local governments that trickle down to individuals, had its budget increased nearly 10-fold.
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