“Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America. For everywhere we look, there is work to be done. The state of our economy calls for action, bold and swift, and we will act — not only to create new jobs, but to lay a new foundation for growth. […] We will harness the sun and the wind and the soil to fuel our cars and run our factories. […] All this we can do. All this we will do. – President Barack Obama, Inaugural Address
With these words, President Obama ushered in the age of going green into mainstream America. While this has been a topic of much interest for many years, President Obama has made it a focus of his presidency, offering tax incentives for going green. Some of these have been criticized, but it is my opinion that these credits will not only encourage home and vehicle owners to go green — which will benefit the environment as a whole — but they will provide needed economic stimulation, both to consumers and tax payers, but also to the various industries (car, housing, etc.) that are making an effort to provide products that are environmentally-responsible.
According to the IRS, homeowners will have six energy-related tax credits, which were created or expanded by the American Recovery and Reinvestment Act of 2009:
- Residential Energy Property Credit: This credit will reimburse 30% of the cost of energy-efficient home improvements. This includes added insulation, energy-efficient exterior windows, and energy-efficient air conditioners and heating systems. The maximum credit is $1,500, and the standards for qualification for this credit are higher than before.
- Residential Energy Efficient Property Credit: This tax credit is nonrefundable, and will allow a 30% reimbursement for qualified alternative energy equipment for your home, such as solar hot water heaters, geothermal heat pumps, and wind turbines. The previously imposed maximum amounts have been removed.
- Plug-In Electric Drive Vehicle Credit: This tax credit replaces the earlier credit for hybrid vehicles, instead allowing a minimum $2,500 and maximum $7,500 credit (depending on battery capacity) for the purchase of a qualified electric vehicle.
- Plug-In Electric Vehicle Credit: This credit applies to qualified two- and three-wheeled electric vehicles, and other low-speed electric vehicles. The tax credit is for up to 10% of the cost, not to exceed $2,500.
- Conversion Kits: This tax credit applies to plug-in electric vehicle conversion kits, and will reimburse up to 10% of the cost of converting a vehicle to a qualified plug-in electric drive vehicle. The credit may not exceed $4,000, and only applies to conversions made before 31 December 2011.
- Treatment of Alternative Motor Vehicle as a Personal Credit Allowed against AMT: This allows the Alternative Motor Vehicle Credit to be applied against the Alternative Minimum Tax.
For those who aren’t “green savvy”, this may seem a little confusing, and even daunting at times. However, what it all boils down to is that, if you take the time and consideration to be environmentally- conscious and –responsible, you will reap the benefits when tax season rolls around, big time.
Take, for example, Stephen and Elaine Levine of Somerset, New Jersey. When they filed their 2010 tax return earlier this year, they received a $15,000 tax credit for converting their home to solar power. When you consider that their investment totaled $50,000, they estimate that their investment will be paid off in five years. After figuring that he would save approximately $1,600 a year in electricity bills, Mr. Levine stated, “All I was doing was trying to do something that was green. But it turns out it’s a pretty good investment.”
If you have ever entertained thoughts of converting your home to solar power, converting your vehicle to being an electric one, or investing in energy-efficient heating and air conditioning systems, it would seem that now is the optimal time to do it. Get on the phone to your local installer, work out a deal, and make it happen!
Danielle Rhodes, who blogs on behalf of Sears and other prestigious brands, enjoys spending her time keeping up with the latest innovations in home appliances.