Apr 2, 2009

Going Green Means Getting Green

Going green might mean you get to keep more of your hard-earned money than you otherwise would, and that is good news in this challenging economy. How is this possible? Tax credits. Paying attention to these potential tax benefits may result in hundreds or even thousands of dollars in savings for you this year. Several energy-related tax credits available for 2008 have been added, along with new credits, for 2009.

Some car dealers complained that the stimulus package didn’t have much in it to persuade consumers to buy cars, but there are serious tax incentives connected to purchasing a new alternative-fuel or plug-in electric car. The alternative-fuel credit, which includes hybrid vehicles, is based on a formula determined by weight, fuel economy and technology. Taxpayers can claim up to $3,400 for the alternative-fuel credit, according to tax specialist H&R Block. The plug-in electric vehicle credit, determined by the capacity of the battery system, can be up to $7,500. Both credits are subject to a phase-out based on the number of cars sold.

For those who purchase electric vehicles, there are further potential savings if they generate some electricity themselves. For example, for the 2008 tax year there is a credit for residential energy-efficient property (REEP) that was purchased and used to provide energy to the taxpayer’s home in 2008. The REEP credit also includes the cost of installation. If you purchased a fuel cell last year, you are entitled to $500 for each half kilowatt of capacity. Solar panels entitle you to a credit of 30 percent of their cost -- up to $2,000 -- and “small wind energy property” means a credit of 30 percent of cost -- up to $4,000. The tax code does not offer a credit for building your own at-home nuclear reactor.