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Green Incentives

Green Incentives - Consumer Energy Tax Incentives

The American Recovery and Reinvestment Act of 2009 extended many consumer tax incentives originally introduced in the Energy Policy Act of 2005 (EPACT) and amended in the Emergency Economic Stabilization Act of 2008 (P.L. 110-343).

A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Consumers can itemize purchases on their federal income tax form, which will lower the total amount of tax they owe the government.

Fuel-efficient vehicles and energy-efficient appliances provide benefits such as better gas mileage,lower energy bills, and reduced air pollution. Below is a summary of tax credits available to consumers.

Home Energy Efficiency Improvement Tax Credits

Consumers who purchase and install energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in existing homes can receive a tax credit for 30% of the cost, up to $1,500, for improvements "placed in service" starting January 1, 2009, through December 31, 2010. See for a complete list of tax credits available.

Residential Renewable Energy Tax Credits

Consumers who install solar water heating and solar electric systems, small wind systems, geothermal heat pumps, and residential fuel cell and microturbine systems can receive a 30% tax credit for systems placed in service before December 31, 2016.

Hybrid Gas-Electric and Alternative Fuel Vehicles Tax Credits

Consumers who buy or lease a new hybrid gas-electric car or truck are eligible for an income tax credit for vehicles "placed in service" starting January 1, 2006, and purchased on or before December 31, 2010.

Alternative-fuel vehicles, diesel vehicles with advanced lean-burn technologies, and fuel-cell vehicles are also eligible for tax credits. See the IRS's Qualified Hybrid Vehicles list.

Plug-In Electric Vehicles

The Recovery Act modifies the credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity. To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of less than 14,000 lbs, and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity.