The American Recovery and Reinvestment Act was passed in 2009 to extend many energy-related tax incentives to consumers. These were actually tax credits as opposed to tax deductions which provide for a reduction in tax by a dollar-for-dollar amount on the tax return while a tax deduction only reduces the tax that is owed by a percentage. Consumers need to itemize such purchases on their federal tax return if they are to receive the credit in their tax payment.
For an existing home and primary residence, consumers who purchase and install such products as energy-efficient windows and doors, insulation, heating, ventilating and air conditioning equipment, non-solar water heaters, metal and asphalt roofs and biomass stoves are eligible for a tax credit of 30% of the cost up to $1,500. Any of these items must have been installed between January 1, 2009 and December 31, 2010.
A 30% tax credit can also be received for consumers who purchase solar energy systems, small wind systems, geothermal heat pumps, residential fuel cells or micro-turbine systems and put into them service before December 31, 2016. If this is done, the previous tax credit mentioned is no longer applicable.
Consumers and businesses can also receive tax credits for special types of vehicles. Hybrid gas-electric cars or trucks that were purchased and placed in service between January 1, 2006 and December 31, 2010 can receive a tax credit that is determined by the vehicle’s weight and its fuel economy. Tax credits are also available for vehicles that use alternative fuels or have diesel engines with advanced lean-burn technologies, or vehicles that use fuel cells.
The tax credit can also be applied to plug-in electric vehicles purchased after December 31, 2009. Depending on the capacity of the battery, the minimum amount of the tax credit is $2,500 and can reach a maximum of $7,500. Qualifying vehicles must have certain features such as being brand new, having at least four wheels, weigh less than 14,000 pounds and getting their energy from a battery that is rechargeable from an external source of electricity.