Review of the Energy Tax Credit Plans

Overview and Backgound

The US federal government grants a federal solar energy tax credit (also applicable to wind turbines), and the different states grant Energy Tax Rebates to encourage homeowners to invest in renewable clean energy that will gradually replace the energy produced by burning fossils. Similar tax incentives are provided in Canada.
A second category are tax credits on investments in home energy improvements. Both categories are detailed in the paragraphs bellow.The tax benefits are available only through tax year 2016!

The Window of Opportunity for the Federal Energy Tax Credit

The reasons for this generosity stem from an ambition to achieve the following goals:

Reduce the carbon footprint and mitigate the adverse effects of global warming
Minimize the nation dependency on imported oil from politically unstable regions
Generating more jobs in the US related to clean energy (R&D, manufacturing, installation, maintenance, education)

This is a window of opportunity for you to exploit (The IRS tax credit is valid through 2016)
The solar tax credit is substantial and make your out of pocket Capital Expense more manageable and the Return on your Investment period much shorter.

View my page on energy financing to see the entire financial picture.

The Federal Energy Tax Credit Plans

The IRS provides the following energy tax incentives. I restrict myself to residential property (or home owners in other words)

Solar Water Heaters and Solar Electric Panels

For new (as of January 2009) residential solar power systems and residential wind turbines the tax credit is 30% of the investment in equipment and installation, with no upper limit.

For new (as of January 2009) solar water heaters the tax credit is 30% of the investment, with no limit.

Investments related to residential energy efficiency improvements

On investments that improve the home energy efficiency such as better furnaces, building insulation, doors and windows insulation, roof insulation a biomass furnace, etc.), the tax credit was 30% limited to 1,500$ in 2009 and 2010 combined.
As of January 2011, it is only 10%, limited to $500, on approved items only).
For more information on home energy improvements ideas click here

You may correctly assume that there are constraints and conditions for getting the tax credits. You are encouraged to consult your tax consultant

Stimulus Energy Tax Credit for windows, doors and skylights

(nicknamed 1500 energy tax rebate)

On February 17th 2009, the president signed into law the American and Reinvestment Tax Act of 2009. This bill modified the tax rebate on purchasing Energy Star windows, doors and skylights to 30% of what was purchased up to a limit of $1,500. click here to view more details, updated to include the January 2011 changes, view the 1500 energy tax credit page

Canada Energy Tax Plans

Canada and the different provinces/territories have Energy Tax Incentives and Rebates plans.
Click to view this link that contains background on the Canadian energy tax incentives.

Also, you may find that this Canadian tax software is useful in helping to find all the deductions you may be eligible for this tax season.

States Level Tax Incentives

Each state has a different incentives’ package, therefore I’ll build up gradually a list of what is available in the different states.

Arizona

California

Florida

New York State

Texas Energy Tax Credits

The state of Texas doesn't have a tax rebate program. These utilities do have tax rebate programs:Austin Energy - Solar PV Rebate Program, Austin Energy - Solar Water Heating Rebate, Bryan Texas Utilities - Solar Hot Water Rebate Program, Bryan Texas Utilities - Solar PV Rebate Program, CPS Energy - Solar Hot Water Rebate Program, CPS Energy - Solar PV Rebate Program, Farmers Electric Cooperative - Residential/Agricultural Energy Efficiency Rebate Program, Guadalupe Valley Electric Cooperative - Renewable Energy Rebates, Oncor Electric Delivery - PV Incentive Program, Oncor Electric Delivery - Solar Water Heating Incentive Program
A very important consideration for a Texas homeowner is how to choose the Retail Electricity Provider (REP).
Please view my page on Texas Electricity Rates

Energy Star Appliances

The purchasing of energy star appliances does not entitle the purchaser to claim a tax deduction. However, new cash rebates are granted as of April 2010 for replacing old appliances with new Star Energy Rated Aplliances. Click here to view my page on the new cash for appliances rebate program