By Jason Alderman
One way the government hopes its 2009 economic stimulus plan will help jumpstart the economy is by investing billions of dollars in industries that support energy efficiency – everything from electric car battery technology to wind turbines to modernizing the country’s power grid.
Corporations aren’t the only ones receiving incentives, however: Individual taxpayers can reap considerable tax benefits by improving their home’s energy efficiency – not to mention the long-term savings they’ll incur from reducing their utility bills.
Here are a few highlights:
The total tax credit you can claim for many energy-efficiency home improvements made during 2009 and 2010 has increased from $500 to $1,500. That’s a cumulative total of $1,500, so you can break it up between the two years however you choose.
You may now claim a tax credit for 30 percent of the purchase price for a variety of home improvements, up to the $1,500 limit. Credit for installation costs is also allowed in certain cases, such as for HVAC (heating, ventilation and air conditioning) systems, biomass stoves, water heaters, solar panels, geothermal heat pumps, wind energy systems and fuel cells.
Tax credits for many energy-efficiency home improvements that were previously allowed in 2006 and 2007 but then disallowed in 2008 are once again eligible during 2009 and 2010. Some common covered expenses include:
- Home shell improvements designed to prevent heating and cooling leaks, including insulation, metal and asphalt roofs, exterior and storm windows, doors (including patio and sliding glass), skylights and weather stripping.
- HVAC systems, including central air conditioning, air-source and geothermal heat pumps, and natural gas, propane and oil furnaces.
- Gas, oil, propane, solar and electric heat pump water heaters.
- Biomass (plant matter) stoves.
- Other renewable energy technology including small wind generators and photovoltaic systems.
- Hybrid, diesel, battery electric, alternative fuel, fuel cell and plug-in electric cars.
Note that there are specific requirements and restrictions for each of these products, so be sure to do your research before purchasing them. For example, with vehicles, there are only a finite number of credits available per manufacturer, so verify with the dealer.
A good resource for rules is the government’s Energy Star website, which has detailed information on the various tax credits available (www.energystar.gov/taxcredits).
Feel good about the impact you can have on the environment – and on your wallet – by taking advantage of these energy-efficiency tax credits.
Jason Alderman directs Visa’s financial education programs. Sign up for his free monthly e-Newsletter at www.practicalmoneyskills.com/newsletter.
Connect with NJTODAY.NET
Join NJTODAY.NET's free Email List to receive occasional updates delivered right to your email address!