 |
|
Energy Tax Incentives
The Energy Tax Incentives Act of 2005 contains a multitude of tax incentives to encourage conservation, use of alternative energy sources, and fuel efficiency. The credits are available in 2006 and 2007. The Act provides tax incentives for individuals to purchase energy efficient assets, and for manufacturers and builders to furnish them.
In a nutshell, the Act provides:
- Tax credits for the purchase of hybrid, fuel cell, advanced lean-burn, and other alternative power vehicles. The size of the credit varies depending on the weight class of the vehicle and the rated fuel economy. The credit applies to vehicles placed in service after 2005, with termination dates varying with the type of alternative power vehicle. Additionally, Code Sec. 179A (the pre-Energy Tax Act law deduction for certain clean fuel vehicles and refueling property) now sunsets after 2005 (instead of after 2006, as was originally scheduled).
- A 30% tax credit for the purchase of qualifying residential solar water heating, photovoltaic equipment, and fuel cell property. The maximum credit is $2,000 (for solar equipment) and $500 for each kilowatt of capacity for fuel cells. The credit applies to property placed in service after 2005 and before 2008.
- A 30% business tax credit for the purchase of fuel cell power plants and a 10% credit for the purchase of stationary micro-turbine power plants, effective for periods after December 31, 2005 and before January 1, 2008, for property placed in service in tax years ending after December 31, 2005.
- New 10% personal tax credit for energy efficient improvements to existing homes. The lifetime maximum credit per taxpayer is $500 and applies for property placed in service after December 31, 2005 and before January 1, 2008.
- A business tax credit for contractors for the construction of new energy efficient homes. The credit is either $2,000 or $1,000 per home, depending on the type of home and the energy reduction standard it meets. The credit applies to homes whose construction is substantially completed after December 31, 2005, and which are purchased after December 31, 2005 and before January 1, 2008.
- New deduction for energy efficient commercial buildings meeting a 50% energy reduction standard. The deduction, generally $1.80 per square foot, but 60¢ per square foot for certain separate building systems, is effective for property placed in service after December 31, 2005 and before January 1, 2008.
- New manufacturers' tax credit for energy efficient dishwashers, clothes washers, and refrigerators manufactured in 2006 and 2007. The maximum credit is $100 per dishwasher or clothes washer, and $175 per refrigerator.
If you have specific questions as to how you may be affected by this new tax legislation, or you want to take advantage of any of the tax incentives offered, please contact us.
|
