Financing alternative energy with tax rebates and grants is a great way to get your project operational. Investing in your own clean energy production and efficiency is a sound financial investment in many cases because it can reduce or eliminate your energy expenses. Alternative energy and energy efficiency solutions also create added energy security, allowing you to be independent from the grid. Today numerous tax rebates and financial incentives are available to help you choose clean energy, making it a great time to make the switch.
Here you'll find information on financial benefits such as tax credits for renewable energy projects. Check out the Faq's below as a helpful guide to the subject. The opportunity to go green is now even greener. Financial incentives at federal, state, and local levels make it more cost effective than ever to make the switch. Hear a Tax Credit Podcast
There is no maximum credit, all credits can be carried forward, and must be redeemed before December 31st, 2016. The credit covers installation costs and does not have to be for the primary residence to be eligible.
| Solar Electricity, Heating, Cooling |
Photovoltaic (PV) system must meet applicable fire and electrical code requirements. |
| Solar Hot Water |
At least half the energy used to heat the dwelling's water must be from solar. May not be applied for hot tubs or swimming pools. must be certified by SRCC or by comparable entity endorsed by the state in which the system is installed. |
| Wind Power |
System must be smaller than 100 KW. |
| Geothermal Heat Pump |
Must meet federal Energy Star Requirements |
| Biomass Stove |
Must use plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste, residues and pellets, plants, grasses, and fibers" |
| Natural Gas Furnace |
Annual fuel utilization efficiency (AFUE) greater than or equal to 95 |
What is an energy rebate?
An energy rebate is a tax credit; it is like a savings coupon on your taxes. Imagine someone decides to put the breeze into the grid with a Skystream Wind System. The cost is $10,799 and $1,200 is paid to a local contractor for complete installation. Once the unit is in operation send in IRS Form 5695 when filing taxes. In this wind power example the total spent is $11,999, 30% of which is a $3,599.70 tax reduction.
What are the limits?
One's tax obligations can be reduced all the way to zero. There is no further pay after zero is reached, however excess credits can be carried forward for the life of the incentive, which is until 2010 for the Efficiency credit and 2016 for the Renewable Energy credit.
The Renewable Energy tax credits have no upper limits on how many one can qualify for, while the Energy Efficient tax credits can total up to $1,500 in 2009 and 2010 combined.
How long is the credit good for, when does it start?
To obtain a Renewable Energy credit the technology should be placed in service before December 31, 2016. The IRS defines "placed in service"as when the property is ready and available for use. So, it's not whenyou purchase, but the day they are installed andable to be used. Ifthe installation is on a new home, the"placed in service" date is the date of occupancy by the homeowner. Thesame goes for the Efficiency rebate, except it is currently scheduledto end December 31st, 2010.
Are installation costs covered?
Installationcosts are covered by the tax credit for qualifying Heating,Ventilation, and Air Conditioning systems, biomass stoves, waterheaters, solar power equipment, geothermal heat pumps, wind energysystems, and fuel cells. Installation is very specifically defined as "expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property."
Which form do I send in?To claim the tax credit fill out the 2009 IRS Form 5695 and submit itwith your 2009 taxes (by April 15, 2010). Currently, only the 2008 versionis available. This page will be updated when the new version of theform becomes available.
Energy Tax Credit Form 5695 - Draft
Which other incentives available?
There are more products that provide tax credits. Listed above are the product categories we carry.There are also further federal incentives available, which will be summarized on this page soon. Until then check this out and for incentives at the state and local level type in your zip code at DSIREUSA.org.How about for Vehicles?
There are tax credits available for a few efficient models of diesels, hybrids, electric vehicles and the following alternative fuels,compressed natural gas, liquefied natural gas, liquefied petroleum gas,hydrogen, and any liquid at least 85% methanol by volume.
Where did these incentives come from?
The Energy Policy Act of 2005 first established tax credits forenergy efficiency. In 2008 these were expanded in scope and in 2009were extended through 2010.
How about for bigger projects?
Who do I contact with a question about this?
While Organic Mechanic intends to share this information accurately, we cannot provide certified tax advice and recommendcontacting a professional with tax questions specific to yoursituation. And more resources check out the Energy Star, DSIREUSA.org's Efficiency and Energy pages, and the IRS site. Here is an audio podcast from them which very clear and helpful! Also for vehicle related information go to FuelEconomy.gov and for more the Tax Incentive Assistance Project, which is also avaible in Espanol.
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