Tis the Season for Tax Incentives

While the Federal Residential Energy Efficiency Tax Credit is good through December 2010, if you want to get your credit this tax season, you need to complete your projects before New Years so you can get your $1,500 tax credit this spring.

The credit applies to energy efficiency improvements in the building envelope of existing homes and for the purchase of high-efficiency heating, cooling and water-heating equipment. Efficiency improvements or equipment must serve a dwelling in the United States that is owned and used by the taxpayer as a primary residence. The maximum amount of homeowner credit for all improvements combined is $1,500 for equipment purchased during the two-year period of 2009 and 2010. – DSIRE

This tax credit applies to all sorts of greening projects around the home like:

  • air sealing and insulation
  • installing a high efficiency boiler or furnace
  • installing a high efficiency water heater
  • installing high efficiency central air conditioning

Be sure to check with your local utility for other rebates that you may be available. We have taken advantage of National Grid’s (our local gas company), $2,000 rebate for Air Sealing and Insulation work and earlier this year another $1,000 rebate for installing a high efficiency boiler. To check what is available in your state, check out the my earlier post What Incentives Are Available for You.

Even More Tax Incentives for Renewable Energy Projects

The tax incentives do not stop with energy efficiency and building envelope improvements, though that is the best place to start.  Beginning January 2009, the cap on the federal personal tax credit for residential renewable energy projects was lifted.  You can now get 30% of the total project costs for:

  • solar-electric (PV)
  • solar-water heating (thermal)
  • fuel cell – there is a maximum
  • small wind
  • geo-thermal heat pump
    More details, see the DSIRE listing.

For example, if you install a $20,000 solar PV system (1-2kW range) you would get an $6,000 credit on your federal taxes.  Many states also have very attractive tax incentives to encourage the move away from fossil fuels.  Massachusetts adds another 15% up to $1,000 personal tax credit for the same types of renewable energy projects. Therefore in Massachusetts you would get a $6,000 Federal tax credit and $1,000 MA tax credit lowering the total project costs to $13,000.  You could also be eligible for various state or local solar/renewable energy rebates.  The rebates in Massachusetts have been pretty generous (another $2,000 to $5,000 for this sized system), but are currently in flux with the implementation of the Green Communities Act, so I cannot be more specific.

If you have been talking about doing an energy efficiency project, see if you can get it done before the end of the year, so you can leverage the various tax credits a year sooner than if you wait until January.  I know how long that can be as we replaced our boiler this past January and will not see a penny of the tax credits until we file our taxes next April.

Happy Greening!

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