Now is the time to take advantage of energy tax credits that are planned to expire in the next few years. Congress has extended certain tax credits to help the future of our energy sources by giving Americans incentive to make energy efficient improvements to their home.
As energy consumption continues to increase, Congress is looking for ways to help individuals implement alternative energy sources and reduce the energy costs for households in the United States. The energy credits that were set to expire at the end of 2013 were extended with the PATH Act. This allows homeowners to make improvements to their homes in order to lower the cost of electricity bills while getting a tax break.
The applicable energy credits are broken into two types: The Residential Energy Efficient Property Credit and the Nonbusiness Energy Property Credit.
The Residential Energy Efficient Property Credit is 30% of the cost of the following property (including labor costs related to the preparation, assembly, and installation):
– Qualified Solar Electric Property*
– Solar Water Heating Property*
– Small Wind Energy Property**
– Geothermal Heat Pump Property**
– Fuel Cell Property (limitations apply)**
*The Credit for Qualified Solar Electric Property and Solar Water Heating Property is available at 30% for systems placed in service by December 31, 2019; 26% for systems placed in service by December 31, 2020; and finally expires at 22% for systems placed in service by December 31, 2021.
**Systems must be placed in service by December 31, 2016 to qualify for the 30% credit. There is no reduced credit for systems placed in service in subsequent years.
The Nonbusiness Energy Property Credit is 10% of the cost, up to $500, that applies to qualified energy improvements such as:
– Insulation material or system designed to reduce heat loss or gain
– Exterior windows and skylights (limited to $200)
– Exterior doors
– Roofing specifically designed to reduce heat gain
– Certain electric heating and cooling systems
Improvements must be placed in service by December 31, 2016 to qualify for the 10% credit.
With some of these credits expiring in 2016, there is no better time than now to make energy efficient improvements to your home! Certain limitations apply to these credits; please feel free to call us with any questions.
Plug-In Electric Vehicle Credit: What You Need to Know
For the past few years, there has been a lot of talk about federal tax incentives for purchasing electric or plug-in vehicles as they become more common on the streets. If the necessary requirements are met, the base credit amount for the vehicle is $2,500 and the maximum can be up to $7,500 depending on the specifics of the vehicle purchased.
The credit will begin to phase out once car manufacturers have sold 200,000 qualifying vehicles. As of now, none of the manufacturers have reached the 200,000 limit, but sales are expected to continue to rise as we approach 2017. Contact your L&B professional for more information.