The voices of Tax Policy Center's researchers and staff
It’s never too early to plan for next year’s taxes. Let’s say you’re thinking about doing some energy-saving home improvements soon and want to know what federal tax credits are available and how they work. How would you find out?
You might try the IRS website. I did but, unfortunately, couldn’t find any information about energy credits for 2009.
So what’s a green consumer to do? Google, of course. I found two excellent websites. The Tax Incentives Assistance Project provides loads of information on the raft of energy efficiency incentives in the tax code. They even post a matrix of federal energy tax incentives detailing which types of biomass stoves, duct sealing, and other energy-saving purchases qualify for credits. The website also features information on state incentives --- a hyperlink takes you to a clickable map of the United States.
Another go-to info source is the Energy Star website-- a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy.
The Tax Incentives Assistance Project is sponsored by a coalition of public interest nonprofit groups, government agencies, and other nonprofit organizations involved in energy efficiency,the Department of Energy (DOE), and the Environmental Protection Agency (EPA). Energy Star comes to you courtesy of DOE and EPA.
Hallelujah that these groups are giving taxpayers this information. But green consumers still need to do some careful searching to figure out who and what qualifies for the credit in 2009. On these websites, it’s hard to answer two important questions: are there income limits on the credits? And do they survive the AMT? After poking around, I did find answers on the frequently asked questions section of the Energy Star website. There is no income limit (though the credit is not refundable), and the AMT poses no problem, at least in 2009. But if Congress doesn’t amend the law, AMT taxpayers won’t get any benefit from the credits in 2010. My “research” on these credits turned up a rule I wasn’t aware of --- while you can now claim up to $1,500 in home energy credits, any credits you claim in 2009 count towards the limit in 2010. But note that the $1,500 cap doesn’t apply to geothermal heat pumps, solar water heaters, solar panels, fuel cells, and wind generators. And don’t forget that the tax credit for fuel cells is limited to $500 per .5 kW of power capacity.
Sound complicated? It is. There must be better ways to encourage energy savings!
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.