Tax Credits for Energy Efficiency

Homeowners who purchase an energy-efficient product or renewable energy system for their homes, may be eligible for a federal tax credit. The credit equals 30 percent of cost up to $1,500.

Some of the improvements that may qualify for the credit include windows and doors including sliding glass doors, garage doors, storm doors and storm windows.

Improvements to a home's insulation, roof, furnace, water heaters and biomass stoves might also meet the government's criteria for the credit. Solar panels and solar water heaters along with small wind-energy systems might also fit the bill.

The Department of Energy points out that 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," the department says.

Energy-efficient appliances and products provide many benefits such as fewer emissions, lower energy bills, increased indoor comfort and reduced air pollution.

In addition to federal tax incentives, some consumers might also be eligible for utility or state rebates, as well as state tax incentives for energy-efficient homes, vehicles and equipment. California's Energy Commission's Web site (www.energy .ca.gov) has more information on specific state tax information.

 

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