The American Recovery and Reinvestment Act of 2009
What are Consumer Energy Tax Incentives?
Here’s what the American Recovery and Reinvestment Act Means to You:
30% of cost with No upper limit
December 31, 2016
Existing homes & new construction qualify. Both principal residences and second homes qualify. Rentals do not qualify.
1. Geothermal Heat Pumps
Geothermal heat pumps are similar to ordinary heat pumps, but use the ground instead of outside air to provide heating, air conditioning and, in most cases, hot water. Because they use the earth’s natural heat, they are among the most efficient and comfortable heating and cooling technologies currently available.
2. Small Wind Turbines (Residential)
3. Solar Energy Systems
Credit Details: 30% of the cost, up to $500 per .5 kW of power capacity
December 31, 2016
Existing homes & new construction qualify. Must be your principal residence. Rentals and second homes do not qualify.
4. Fuel Cells (Residential Fuel Cell and Microturbine System)
P.L. 110-343 | THE EMERGENCY ECONOMIC STABILIZATION ACT OF 2008:
ENERGY TAX INCENTIVES
|§§ 103-105 | Long Term Extension of
Energy Investment Tax Credits (ITC)
The bill amends Section 48 to extend the 30% investment tax credit for solar energy property and qualified fuel cell property January 1, 2017. Public Utility Property now qualifies for the investment tax credit and is no longer statutorily excluded.
Qualified small wind energy property is added as a category of qualified investment for the 30% tax credit. The 10% investment tax credit for microturbines is extended to December 31, 2016. The bill increases the cap for qualified fuel cells to $1,500 per half kilowatt of capacity. The bill also provides a new 10% investment tax credit for combined heat and power systems, as well as geothermal heat pumps.
§ 106 | Long-term Extension & Modification of Residential Energy-Efficient Property Credit
The bill extends the 30% individual tax credit for residential solar electric expenditures through December 31, 2016 (8 years) pursuant to Section 25D. A previous residential solar electric tax credit cap of $2,000 has been eliminated. The bill adds residential small wind property as a category of qualified expenditure for tax credits with a cap of $4,000. Qualifying geothermal heat pumps expenditures are capped at a $2,000 tax credit.
AUDIENCE: Consumers – Homeowners
§ 107 | New Clean Renewable Energy Bonds (“CREBs”)
The bill, by amending Section 54, authorizes $800 million of new clean renewable energy bonds to finance facilities that generate electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, qualified hydropower, landfill gas, marine renewables, and trash combustion facilities. The new bond authorization is allocated into thirds among qualifying: projects of State, local, tribal governments; projects of public power providers, and electric cooperatives. The bill extends the termination date for existing CREBs to December 31, 2009.
AUDIENCE: Government – States, Municipal, Tribal
§ 304 | Extension of Credit for Energy-Efficiency Improvements to New Homes
Pursuant to current law, contractors receive a credit for the construction of energy-efficient new homes that achieve a 30% or 50% reduction in heating and cooling energy consumption relative to a comparable dwelling. The credit equals $1,000 for homes meeting a 30% efficiency standard, and $2,000 for homes meeting a 50% standard. The bill extends the new energy efficient home tax credit through December 31, 2009 by amending Section 45L.
Audience: Private Business – Residential Home Builders
§307 | Extension & Modification of Qualified Green Building & Sustainable Design Project Bond.
The bill extends the authority to issue qualified green building and sustainable design project bonds through the October 1, 2012 by amending Section 142(l).
AUDIENCE: Private Business – Real Estate Developers
Consumer Energy Tax Incentives
What the American Recovery and Reinvestment Act Means to You
The American Recovery and Reinvestment Act of 2009 extended many consumer tax incentives originally introduced in the Energy Policy Act of 2005 (EPACT) and amended in the Emergency Economic Stabilization Act of 2008 (P.L. 110-343).
ABOUT TAX CREDITS
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Consumers can itemize purchases on their federal income tax form, which will lower the total amount of tax they owe the government.
Fuel-efficient vehicles and energy-efficient appliances and products provide many benefits such as better gas mileage –meaning lower gasoline costs, fewer emissions, lower energy bills, increased indoor comfort, and reduced air pollution.
In addition to federal tax incentives, some consumers will also be eligible for utility or state rebates, as well as state tax incentives for energy-efficient homes, vehicles and equipment. Each state’s energy office web site may have more information on specific state tax information.
Below is a summary of many of the tax credits available to consumers. Please see the ENERGY STAR® page on Federal Tax Credits for Energy Efficiency for more details on federal incentives and the Database of State Incentives for Renewables and Efficiency (DSIRE) for information on federal, state, local, and utility incentives.
HOME ENERGY EFFICIENCY IMPROVEMENT TAX CREDITS
Consumers who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in existing homes can receive a tax credit for 30% of the cost, up to $1,500, for improvements “placed in service” starting January 1, 2009, through December 31, 2010. See EnergyStar.gov’s Federal Tax Credits for Energy Efficiency for a complete summary of energy efficiency tax credits available to consumers.
RESIDENTIAL RENEWABLE ENERGY TAX CREDITS
Consumers who install solar energy systems (including solar water heating and solar electric systems), small wind systems, geothermal heat pumps, and residential fuel cell and microturbine systems can receive a 30% tax credit for systems placed in service before December 31, 2016; the previous tax credit cap No longer applies.