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Congress recently passed the Energy Tax Incentives Act of
2005. This legislation provides more than 14-billion dollars in
tax breaks primarily for businesses in the energy sector to improve the
national power grid. Such improvements are necessary to prevent
major blackouts like those in the Northeast and Midwest two years ago.
But the Act also provides some incentives for individuals and
businesses to make certain energy conservation or alternative energy
expenditures. While these credits and deductions may not net you a
significant tax break, you should consider them if you – or your
business – are planning energy-efficient improvements or purchases, and
want to save money while doing your part for the environment.
We offer this information to help you understand how the Act may affect
you and how you might take advantage of it to reduce your tax
liability. As with any new tax legislation, there are certain
restrictions and limits such as the total amount of credit available or
the types of qualifying products covered. Call our office or
visit our website for more detailed information about the provisions of
this legislation.
The Energy Tax Incentives Act comes on the heels of several other major
tax acts over the past few years. Plus, Congress will be back in
session after Labor Day – and back to work on a variety of additional
tax, tax reform and social security reform legislation. There
could be additional tax law changes soon thereafter.
Decosimo advises individuals and businesses on ways to minimize their
taxes and maximize their financial well-being and we’ll keep you posted
on any changes we think you should know about. Again, if you have
questions about this latest change in tax law or any other tax matter,
call us at (423) 756-7100 or (800) 782-8382.
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Summary of Incentives
Individuals
10% credit for energy efficient home improvements in 2006-2007
- Insulation
- Exterior windows
- Skylights
- Circulating fans
- Hot water boilers
- Heat pumps
- Central air conditioners
- Natural gas, propane or oil furnaces
30% tax credit by installing a solar hot water
heater, electricity-generating solar equipment or a fuel cell placed in
service in 2006-2007
Businesses
10% to 30% credit for purchase of solar energy property, fuel cell and
microturbine power plants placed in service in 2006 and 2007
$2,000 per home constructed in 2006-2007 that meets a 50% energy efficiency standard
$1,000 credit for manufactured homes that meet a 30% energy-efficiency standard
Deduction for the cost of major energy-saving improvements to commercial buildings in 2006 or 2007
Individuals and Businesses
Credits for purchase or lease of hybrid vehicles
Credit for production of energy efficient appliances
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