5 Energy Efficiency Tax Credits in the USA – Master of Accounting Degrees

If the idea of saving money on your taxes while going green sounds appealing, you might want to learn more about energy efficiency tax credits. These are tax credits given by the Internal Revenue Service (IRS) for improvements in energy efficiency that you make to your home or through your business of building homes. Credits are also given for energy efficient automobile purchases.

The details of the tax credits can change from year to year, so make sure that you look for the most updated information from the IRS. You can also often find information from the U.S. Department of Energy.

Below are five energy efficiency credits that can help you save money while simultaneously helping the environment.

Using Renewable Energy Sources In Your Home

The Residential Energy Efficiency Property tax credit rewards you for installing and using geothermal, solar, and wind equipment. Generally you can claim a tax credit on both your main home and a second home, except in the case of fuel-cell equipment (you can only claim credit for that if it’s used in your main home). There is also a limit on how much of a credit you can take for fuel-cell equipment. The credit for other resources is equal to thirty percent of what you paid, including fees for installing it. Energy sources include solar panels, geothermal heat pumps, and wind turbines.

Qualified Energy Efficient Improvements for Nonbusinesses

Insulation, doors, windows, skylights, and at least some roofing material purchases can help you to qualify for this credit. However, your purchase has to meet standards set by the U.S. Department of Energy. This is a rather small credit, equaling ten percent of your costs with strict limits about maximum amounts you can claim.

Residential Energy Property Costs for Nonbusinesses

You can claim a hundred percent of costs on certain heating and air conditioning upgrades if they qualify, again with certain caps and limits. These include certain types of heat pumps, central air conditioning systems, water heaters, stoves, and circulating fans.

Builders Who Build Energy Efficient Homes

If you are in the business of building homes, in other words if you are a contractor, then there are tax credits you may qualify for by building energy efficient homes, manufactured or otherwise. There is a great deal of detailed tax code regarding the qualifications for such homes, but in general, they need to meet requirements regarding efficient cooling and heating usage.

Choosing an Energy Efficient Car

Besides making energy efficient choices regarding your residence or the equipment you use there, you may also qualify for certain credits depending on the type of vehicle you drive. These credits apply to various passenger vehicles which are plug-in hybrids or battery electric vehicles. The amount of the credit varies depending on battery pack size.

Tax credits generally put more in your pocket than deductions. If you are able to take advantage of any of these credits, it’s a win-win situation, for you and for the environment. If you are planning to buy a new vehicle, build a home, or purchase energy resources or heating or cooling equipment for your home, then it can be a good idea to look into energy efficiency tax credits.