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Federal tax credits

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The Energy Policy Act of 2005 allows consumers to receive a federal tax credit for energy efficient improvements made on their home in 2006 and 2007. In December, 2007, legislation to extend several of the Energy Efficiency Tax Incentives fell one vote short of the 60 required to end a filibuster in the Senate. The provision had broad support, but there was opposition to the mechanism proposed to pay for these tax incentives (rescinding a tax break for large oil companies). Some incentives were extended through 2008 by the 109th Congress, in December 2006. Click here for details. As of December 31, 2007, however, the majority of the energy efficiency incentives provided under the Energy Policy Act of 2005 have expired.

Home ImprovementsEdit

The Home Improvements tax credit has expired. The credits were available for home improvements "placed in service" from January 1, 2006 through December 31, 2007. You have until April 15, 2008 to claim credit on your 2007 taxes for any qualified home improvements made to your primary residence during 2007. If you made any qualified home improvements in 2006, but did not claim them on your 2006 taxes, you will need to file an amended return. You can not claim credit on your 2007 taxes for improvements made in 2006.

Tax credits were available for insulation, replacement windows, water heaters, and certain high efficiency heating and cooling equipment. See chart. The maximum amount of homeowner credit for all improvements combined is $500 during the two year period of the tax credit.

If you are building a new home, you do not qualify for the tax credits for "eligible building envelope components" (windows, doors, insulation, roofs) or "qualified energy property" (HVAC & non-solar water heaters). However, the tax credit for photovoltaics, solar water heating, and fuel cells is available for homeowners building new homes. More.

The Internal Revenue Service (IRS) guidance for consumers: IRS Notice 2006-26 PDF Exit ENERGY STAR.

Efficient CarsEdit

Tax credits are available to buyers of hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles. The tax credit amount is based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models. These credits are available for vehicles placed in service starting January 1, 2006. For hybrid and diesel vehicles made by each manufacturer, the credit will be phased out over 15 months starting after that manufacturer has sold 60,000 eligible vehicles. For vehicles made by manufacturers that have not reached the end of the phase-out, the credits will end for vehicles placed in service after December 31, 2010. See the IRS Website for updated information Exit ENERGY STAR.

Solar Energy SystemsEdit

Tax credits are available for qualified solar water heating and photovoltaic systems. The credits are available for systems "placed in service" from January 1, 2006 through December 31, 2008. The tax credit is for 30% of the cost of the system, up to $2,000. This credit is not limited to the $500 home improvement cap. Fuel Cells

There is a consumer tax credit of up to 30% of the cost (up to $500 per 0.5 kW of capacity maximum) for installing a “qualified” fuel cell and microturbine systems. The credits are available for systems “placed in service” from January 1, 2006 through December 31, 2007. This credit is not limited to the $500 home improvement cap.

External ResourcesEdit

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