In August 2005, the federal government passed the Energy Policy Law and the resulting tax credit took effect on January 1, 2006. Not only are energy efficient products rewarded, but also some construction techniques and materials. .
So you save money on your energy bills and pay Uncle Sam less. It seems like a win for everyone.
“By reducing total energy demand for one home or business at a time,” said Samuel Bodman, US Secretary of Energy, “we are also increasing America’s energy security.” The program has the added benefit of being green.
So how exactly does the program work? Provides tax credits for your federal return. Suppose you bought a new hybrid car or replaced the windows with insulated ones. When April 15 rolls around, put the purchase on your taxes, take a credit, and reduce the amount of tax you pay.
Remember that tax credits are different than tax deductions. A tax deduction is subtracted from your income before your taxes are calculated. A tax credit is canceled for the tax that has been calculated to be paid.
Credits often represent better savings than deductions. Tax credits allow you to pay less tax than the person with the same amount of taxable income who did not buy the car.
Tax credits are also available for energy efficient home improvements, such as installing insulation, certain types of windows and roofs, and solar powered equipment. It goes without saying that since it is a government program, there are many rules and regulations. For a more detailed list, visit the program’s website at www.ase.org/taxcredits.
If you need more information, details on saving tax money are available at www.energytaxincentives.com.
Currently, these incentives are only available in 2006 and 2007 unless Congress extends them. Write to your congressman today and tell him to vote to extend the act and then start taking advantage of it!