Show Me the Money at Tax Time
Now that going green is in vogue, the government is getting in on the action by encouraging taxpayers to adopt energy-efficient practices for a reward. Recent legislation provides plenty of tax incentives to eco-friendly individuals and businesses, making right now a great time to save money by going green. Here are some ways to take advantage of federal tax credits (dollar-for-dollar tax reductions) and deductions (reduction in taxable income):
Basic home improvements.
You don't have to install solar panels on your roof or wind turbines in your yard to qualify for a green tax break.
Products that pass the Energy Star test generally use 10 to 50 percent less energy or water than other models. They include everyday items like storm doors, water heaters, and certain types of roofs. Avirett says that for existing homes used as a primary residence, homeowners can get a tax credit of up to 30 percent of the cost of these products, with a cap set at
While more ambitious installations dig a deeper hole in your pocket at the time of purchase, they allow for much bigger refunds come tax time.
Green tax breaks are not just for renovating existing homes: New-home builders have an opportunity to take advantage of tax incentives as well if they built more energy-efficient homes before
Under the Energy Policy Act of 2005, home builders can get a
Lose the clunker.
Not only can you save money on gas by investing in a more fuel-efficient car, but you can also qualify for a federal tax credit.
The highly anticipated Chevrolet Volt, set for production in November, is expected to come with a fairly steep price tag of
But the tax breaks for fuel misers like hybrids and the Volt are available for a limited time. Once an automaker has sold 60,000 vehicles, buyers qualify for just 50 percent of the vehicle's original tax credit after a certain period of time. So assuming Chevrolet sells 60,000 Volts, the credit will then fall to
However, fuel-efficient vehicles that do not qualify for federal tax breaks may be eligible for state ones.
Corporate tax breaks.
Businesses that make changes in their energy systems can get federal tax credits similar to those available to homeowners. Installing a solar water heater, for example, could qualify a business for a tax credit of 30 percent of the cost.
But a more significant incentive is called the Energy Efficient Commercial Buildings Deduction. Although it is a deduction and not a dollar-for-dollar credit, there is still potential for saving big bucks.
Avirett says that by modifying things like lighting, HVAC systems, and other parts of a building to improve energy efficiency, companies could qualify for a deduction of up to
Many states also offer tax incentives for businesses that recycle, buy recycling equipment, or use recycled materials.
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- National Power Grid That Thinks
- Home Sales Flat Before Spring Buying Season
- America's Most Underwater Housing Markets
- The Google Syndrome: China's Corporate Woes
- Companies Learning How to Capture Power of the Oceans and Seas
- Consumers who go green may qualify for federal credits and deductions
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- Return of the Three-Generation Household
Consumers who go green may qualify for federal credits and deductions | Debra Bell
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