New tax credits

I may be late to the party, but I just found out about some new tax credits that are available starting next year. In the Energy Policy Act of 2005 that Congress passed, there are a number of tax credits available for placing energy efficient products in service between January 1, 2006 and December 31, 2007. The IRS still has to release the guidelines, but some helpful information can be found at The Tax Incentives Assistance Project (TIAP) .

Note two phrases:
1) Tax Credits: this means a reduction in your overall tax bill, not a deduction that reduces your taxable income.
2) Placed in Service: not just “bought.”

You can bet there will be forms and paperwork to fill out for these savings, but if you have a project planned you can save some of that cost with these credits. The major categories for individuals are in the insulation, doors/windows, and air/duct sealing for homes, and high-efficiency light-duty vehicles (hybrids or diesels).

The home credits appear to be 10% off of the cost of qualifying expenses, up to $500 total for the two years. For vehicles, there are several charts that show how much you can claim depending on how much emissions are reduced. Many hybrids already qualify for a tax deduction, but the tax credit may be more attractive.

The website listed above spells everything known so far in very plain, easy-to-read terms. Some good links are provided to help see what qualifies. They also promise to update the site when the IRS releases their guidelines. (There is no relation between me and the site)


Keep in mind your state and/or locality may have programs you can take advantage of in regard to energy efficiency. Several years ago during California’s brown-out summer I was able to buy a new clothes washer and refrigerator at a greatly reduced net price due to rebate incentives being offered locally. Not to mention my energy bill went down dramatically--a true winning combination!