Energy Incentive Credits

Most everyone seeks to conserve energy and use it wisely.  There are a number of provisions in the Internal Revenue Code that encourage individuals to be energy smart.

Residential Energy Efficient Property Credit – This energy tax credit is nonrefundable (which means if the credit is larger than your tax due on the return, you won’t receive a tax refund for the excess).  Still this credit will help taxpayers pay for qualified residential alternative energy equipment such as solar hot water heaters, geothermal heat pumps and wind turbines.  The credit is equal to 30 percent of the cost of the equipment.

Plug-in Electric Drive Vehicle Credit – This is for electric drive vehicles that were purchased as new that have a gross vehicle weight rating of less than 14,000 pounds.  The vehicle must be powered by a battery with at least four kilowatt hours that can be recharged from an external source of electricity.  The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity.

Plug-in Electric Vehicle Credit – This is similar to the prior electric vehicle credit, but applies to different types of electric vehicles – certain low-speed electric vehicles and two or three- wheeled vehicles.  The credit amount is 10 percent of the vehicle cost up to a maximum of $2,500.

Conversion Kits – There is also a credit for purchasing a kit and converting a vehicle to a qualified plug-in electric vehicle.  The is equal to 10 percent of the cost  to a maximum credit is $4,000.  Note, this credit is for conversions made before Jan 1, 2012.

In prior years there were tax credit incentives to encourage people to purchase hybrid automobiles.  But as of 2014 those incentives have been phased out and no longer apply to purchases of a hybrid vehicle.

If you have made energy efficient purchases to your home or purchased electric vehicles in the past you may be entitled to tax credits that will reduce your tax liability.  If you need help determining if these credits apply to your situation, then schedule your free consultation by calling (480) 888-7111 or submit a web request here.