Energy Incentives

Consumers

A wide range of energy incentives are available to consumers.

• Home Improvements
  Adding insulation, replacement windows, and certain high efficiency heating and cooling equipment can really pay off.  This tax credit applies to improvements made from January 1, 2006 through December 31, 2007.

• Efficient Cars
  Hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles are better for the environment and that's worth rewarding.  This tax credit is available for vehicles placed in service beginning January 1, 2006.  For hybrid and diesel vehicles made by a manufacturer, the credit will be phased out over 15 months once the manufacturer sells 60,000 eligible vehicles.  For vehicles made by manufacturers that have not reached the end of the phase-out, credits will end for vehicles placed in service after December 31, 2010.

• Solar Energy Systems
  Tax credits are available for solar water heating and photovoltaic systems "placed in service" in 2006 and 2007.  The tax credit is for 30 percent of the cost of the system, up to $2,000.

• Fuel Cells
  This consumer tax credit covers up to 30 percent of the cost (up to $500 per 0.5 kW of capacity maximum) of installing a qualified fuel cell and microturbine system in 2006 or 2007.

Home Builders

Building a new energy efficient home that achieves a 50 percent energy savings for heating and cooling over the 2004 International Energy Conservation Code (IECC), could be worth a $2,000 tax credit.  At least 1/5 of the energy savings must come from building envelope improvements.  This credit also applies to contractors of manufactured homes conforming to Federal Manufactured Home Construction and Safety Standards.

Commercial Builders

A tax deduction of up to $1.80 per square foot is available for owners/designers of new and existing commercial properties who are saving at least 50 percent on heating and cooling costs.  Partial deductions of up to $0.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems.

Tax credits can provide significant savings by reducing the amount of income tax you pay.  Final rules to clarify which products and services qualify for tax credits are determined by the Internal Revenue Service (IRS).  For more information, visit www.irs.gov.