Another Advantage to Going Green: Tax Credits

13 04 2009

As if saving the environment wasn’t enough of an incentive, now there is another advantage to going green: tax credits.

As mentioned in a recent New York Times article, the new government stimulus plan, approved by Congress in February, will offer tax credits to those who make their homes more energy efficient. According to the Alliance to Save Energy, under the American  Recovery and Reinvestment Act of 2009,  the tax credit was increased to 30 percent of the cost of each qualified energy efficiency improvement.

The Alliance to Save Energy website provides a chart showing how many tax credits  the government is offering for certain upgrades. A hybrid car or SUV purchase, for example, can save up to $3,150.

A tax credit is claimed on your income tax form at the end of the year. The credit either increases the amount of m0ney you get back or decreases the amount you have to pay. According to the Alliance to Save Energy’s website,  a tax credit is more valuable than  a  tax deduction, which one’s  taxable income.

The chart from the Alliance to Save Energy’s website is shown below:

Selected Tax Credits

Purchase
Tax savings
Notes
Hybrid car or SUV
$250 to $3,150
Credit depends on fuel economy and weight.
Home improvements:

  • Central air conditioner, heat pump, furnace or boiler
  • Windows, insulation and sealing
30% of cost up to $1,500
Only some Energy Star products (or levels of insulation) qualify.
Ground-source heat pump
30% of cost
Only Energy Star products qualify.
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2 responses

14 04 2009
Rick Hancock

You are so right. I noticed while doing my taxes ( I just finished them yesterday) there were a lot of opportunities to recoup some money with an environmentally acceptable car. Are the tax breaks enough for me to give up my Cadillac? Not yet!

6 05 2009
greenhomesamerica

Great advice. Careful on the home improvement tax credits. It appears that insulation and windows qualify for 30% of material cost only. Heating and cooling equipment qualifies for 30% of total installed costs–all up to $1,500. Solar and geothermal are 30% without a cap. And for existing homes, you should consider starting with a good energy assessment so that you know what investment makes the most sense for your home. See: http://greenhomesamerica.wordpress.com/2008/10/08/home-energy-audits/ for on outline of what an asessment should cover.

Note also that windows are often the LEAST effective improvement. Insulation/air-sealing/duct-sealing are generally the MOST effective improvements.

Thanks,
Mike

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