Tax credits 'pay' those most energy efficient

  • Published
  • By 1st Lt. Amanda Ferrell
  • 325th Fighter Wing Public Affairs
Energy conservation is no longer simply the token issue of grass-roots environmental policy debate and lobbying efforts. 

Since the signing of the Energy Policy Act of 2005, every taxpayer is affected by energy conservation legislation and tax laws, which offer considerable incentives to those who realize the need to become more energy-efficient. 

According to the U.S. Department of Energy, tax credits are available for specific home improvements, solar energy systems, fuel cells and high-efficiency vehicles put into service after Jan. 1, 2006. 

Consumers may disregard energy concerns and the implications of increased consumption, but few ignore the issue when potential tax credits and money saving benefits are involved, said U.S. Department of Energy officials. 

A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax owed. 

Consumers are now able to itemize purchases of energy-saving products on their federal income tax form, which will lower the total amount of tax they owe the government each year. 

According to Internal Revenue Service officials, tax credits are available for home improvements including energy-efficient windows, insulation, doors, roofs and heating and cooling equipment. 

The maximum amount of homeowner credit for all improvements combined is $500 during the two-year tax credit period, which applies to improvements made from Jan. 1, 2006 through Dec. 31, 2007, according to the DOE. 

To qualify, improvements must be installed in or on the taxpayer's principal residence in the United States, said DOE officials. 

"All members of Tyndall who have the opportunity - civilian, military and their family members - should make the best use of the tax credits and rebates," said Gilbert Walker, 325th Civil Engineer Squadron energy and utilities manager. For example, replacing your heating, ventilation and air conditioning unit with approved fluids makes you eligible for federal tax credit. 

The IRS has also made available tax credits to buyers of hybrid gasoline-electric, diesel, battery-electric, alternative fuel and fuel cell vehicles. The tax credit amount is based on a formula determined by vehicle weight, technology and fuel economy compared to standard year models. These credits are available for vehicles put into service after Jan. 1, 2006. 

Credits for energy-efficient vehicles are expected to be phased out based on the number of vehicles produced by the manufacturer over time, and will end December 2010, according to the DOE. 

Tax credits are also available for qualified solar water heating and photo voltaic systems. The credits are available for systems placed in service in 2006 and 2007, not to include systems exclusively used to heat swimming pools and hot tubs. The tax credit is for 30 percent of the cost of solar or photo voltaic systems, up to $2,000, according to the DOE. 

 In conjunction with tax credits, Florida residents may also apply for energy rebates on solar water heating systems. The new Florida Solar Energy Rebates offer those interested in installing a solar energy system a rebate of up to $500 after purchasing and installing the system on a residence, and a $100 rebate for the installation of a solar pool heating system, according to the Florida Energy Office. 
Incentives and benefits associated with becoming more energy-efficient exist and are becoming increasingly common. While individual households are encouraged to apply for tax credits, rebates and other advantages, experts believe energy conservation is more than money in your pocket - it's a lifestyle. 
"People who practice good efforts in their day-to-day activities at home to conserve energy and water tend to bring those efforts to work," said Mr. Walker. "And when we reduce our energy consumption, it reduces the cost for everyone." 

For more information about your benefits as an energy-efficient consumer, go to