LJWorld Green

Tax incentives cut costs of green living

June 10, 2009


Sure the green alternative can be the one that costs you more. But a number of tax credits have been approved to help ease the gap. For more information, check out the Internal Revenue Service’s Web site at www.irs.gov.

Home improvements

Under the American Recovery and Reinvestment Act, homeowners who make their homes more energy efficient using insulation, exterior windows and heating and air conditioning systems, can receive a tax credit for 2009 and 2010.

For up to $1,500, the tax credit is worth 30 percent of the cost of improvements. The new law replaces the 2007 tax credit, which allowed for 10 percent of the cost of the improvements and a $500 lifetime limit.

The 2009 tax credit does have higher energy standards than the 2007 version. The IRS is expected to issue guidance on those standards soon. Until then, the IRS recommends that homeowners rely on the manufacturer’s certification under the old guidelines. For windows and skylights, Energy Star labels can used.

Energy efficient equipment

For homeowners purchasing alternative energy equipment, tax credits are available for 30 percent of the cost. According to the IRS, the new law removes previous caps on the tax credit. The credit covers solar electric heat, solar water heaters, fuel cell technology, wind turbines and geothermal heat pumps.

Hybrid vehicles

Although tax credits have vanished for some of the most popular hybrid cars, they are still an option for some.

Under the Energy Policy Act of 2005, tax credits created for the original purchaser of new hybrid vehicles. However, there was a catch.

The tax credit was only for the manufacturer’s first 60,000 hybrid vehicles. After the 60,000th hybrid was sold, the credit was placed on a phase-out schedule that lasted five quarters.

Hybrids made by Honda and Toyota are no longer eligible for the tax credit.

In April, a phase-out of tax credits for Ford Motor Company hybrids began. Full credit is no longer available, but until Sept. 30, 50 percent of the full credit is available and 25 percent of the full credit is available from Oct. 1 to March 31, 2010. The credit applies to Ford Escape, Ford Fusion, Mercury Mariner and Mercury Milan hybrids.

Full credits are still available for hybrids made by Chrysler, General Motors, Mazda and Nissan. Depending on the model, credits can be as high as $3,400. Credits up to $1,800 are available for Volkswagen and Mercedes-Benz vehicles with advanced lean burn technology.

The IRS suggests those wanting to take advantage of the credit to buy early. The law also changed this year to allow for the hybrid tax credit to be applied against the Alternative Minimum Tax.

Neighborhood electric vehicles

The American Recovery and Reinvestment Act and the Emergency Economic Stabilization Act put in place two new tax credits for neighborhood electric vehicles.

Tax credits are available for low-speed electric vehicles with two or three wheels, which would include motor scooters, that are purchased from now until Jan. 1, 2012. The credit, with a $2,500 cap, is for 10 percent of the cost of the vehicle.

Tax credits also are available for electric vehicles with at least four wheels. Depending on the weight of the vehicle and capacity of the battery, the tax credit can range from $2,500 to $15,000. For both tax credits, the vehicle must be propelled by a rechargeable battery and be manufactured for use on public roads.

Some four-wheeled electric vehicles qualify for both tax credits.

Conversion kits

Taxpayers can claim a tax credit for up to $4,000 for plug-in electric drive conversion kits. The tax credit is for 10 percent of the cost of converting the vehicle.

State tax credit

A state income tax credit is offered to those who have vehicles that use alternative fuels. The credit is 40 percent of the incremental or conversion cost of an alternative fuel vehicle and ranges from $2,400 to $40,000, depending on the weight of the vehicle.

Vehicles that qualify are those that run off of compressed liquid derived from grain, starch, oil seed, animal fat and other biomass.


Kirk Larson 8 years, 9 months ago

Before Ronald Reagan rescinded it, Jimmy Carter gave a tax incentive for solar units on homes. My folks put a solar water heater on their house which reduced their gas bill. After a few years it had paid for itself and all the savings after that was gravy. Kansas needs to adopt net metering so I can put the vertical windmill on my house that I've been dreaming of.

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