Posted by: teatown | March 15, 2009

Green Tax Incentives

Expanded Energy Incentives Enacted!

Mother Nature undoubtedly was delighted on February 17th when President Obama signed The American Recovery and Reinvestment Act of 2009, with significant increases in tax credits for energy efficiency. The idea of providing tax benefits to consumers for making improvements in residential and business energy efficiency was first introduced in the Energy Policy Act of 2005. The Recovery Act of 2009 also includes new tax incentives for businesses, utilities, and government.

A “tax credit” is more valuable than an equivalent tax deduction because a credit reduces your taxes dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. In other words, consumers can itemize approved energy efficiency purchases on their federal income tax form, which will lower the total amount of tax they owe the government.

For details of these new federal tax credits for energy efficiency, see the websites of the U.S. Department of Energy (click here) and Energy Star (click here). Check New York’s NYSERDA website (click here) for additional State incentives.

Examples of  federal incentives for consumers under the Recovery Act of 2009 , include:

  • Tax credits are available in 2009 and 2010 at 30% of the cost, up to $1,500, for existing homes for: energy improved windows and doors; insulation; roofs; HAVC systems; water heaters (non-solar) and biomass stoves.
  • Tax credits are available through 2016 at 30% of the cost, with no upper limit for existing and new homes for: geothermal heat pumps; solar panels; solar water heaters; small wind energy systems; and fuel cells.
  • Some hybrid and electric cars are eligible for tax credits ranging between $500 and $3,000.

In addition to these kinds of federal tax incentives, some consumers will also be eligible for utility or state rebates, as well as state tax incentives for energy-efficient homes, vehicles and equipment. 

From my perspective, President Obama and the Congress are showing great environmental leadership by encouraging consumers through their pocketbooks to move in a greener direction.  Also, it is noteworthy that the additional business generated by the incentives will employ USA citizens – virtually no outsourcing here. Of the new incentives, the most significant from my perspective is the 30% credit for the cost (including installation fees) of geothermal, solar, wind, and fuel cell systems – with no upper limit!  With these new incentives, I am planning to add solar water heating to my own home. I also hope that Teatown can add solar water heating to its Carriage House in 2010.  Will these incentives encourage you to consider greening your house?   Let me know what you think by leaving a comment below.




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