News Update: The Economic Stimulus Bill signed into law on February 17th, 2009 will result in several important new measures to stimulate solar and renewable energy development, manufacturing, installation and operation in the United States.
Tax Credit Cap eliminated for Solar Water heating systems: The $2,000 cap on the 30% Federal Tax Credit for solar water heating systems has been removed. Solar water heating systems, other than those for pools or spas, are now eligible for a full 30% tax credit against the system's cost.
Extended Bonus Depreciation: Last year, Congress temporarily increased the amount (50% of the cost of capital investment) that small businesses could write-off for capital expenditures incurred in 2008 to $250,000 and increased the phase-out threshold for 2008 to $800,000. The bill will extend these temporary increases for capital expenditures incurred in 2009. Accordingly, until the end of 2010, small business taxpayers are allowed to write-off up to $125,000 (indexed for inflation) of capital expenditures subject to a phase-out once capital expenditures exceed $500,000 (indexed for inflation). (Div. B, Sec 1202, p. 74)
There are also several provisions designed to help ease financing of systems, promote training and job creation, manufacturing investments ... more details will be forthcoming and applicabale incentives rolled into our Solar Estimators. The latest legislative actions are available at www.govtrack.us or readthestimulus.org
On 3 October 2008 the 30-percent federal investment tax credit for both residential and commercial solar installations was extended for 8 years.
H.R. 1424 Bill Summary
The solar investment tax credit (ITC) provisions will:
2008 Provisions: IRS Form 5695 & Instructions: Residential Energy Credits.
The Energy Star program also has information related to » tax credits for Consumers (Home Improvements, Cars, Solar Energy Systems, Fuel Cells), Tax Credits for Home Builders, Tax Credits for Appliance Manufacturers, and Tax Deductions for Commercial Buildings
There are many state, federal and local incentives available to help pay for the cost of installing renewable energy systems. Here is a Database of Grants and Rebates.
IRS Releases Guidance on Energy Efficiency Tax Credits
The U.S. Internal Revenue Service (IRS) has issued guidance on the tax credits for new energy efficient homes and for energy efficiency improvements to existing homes, as established by the Energy Policy Act of 2005. A credit of up to $2,000 is available for eligible contractors who build a qualified new energy efficient home and sell it either this year or next. The credit is available for all new homes, including manufactured homes constructed in accordance with the Federal Manufactured Homes Construction and Safety Standards. See the IRS press release and the guidance for traditional homes (PDF 25 KB) and manufactured homes (PDF 36 KB). Download Adobe Reader.
For existing homes, the law provides a 10 percent credit for buying qualified energy efficiency improvements, including insulation, reflective metal roofs, insulated exterior doors, and energy efficient exterior windows and skylights. The law also provides residential tax credits of $50 for each advanced main air circulation fan and $150 for qualified furnaces or hot water heaters fueled with natural gas, propane, or oil. That credit increases to $300 for qualified heat pump water heaters; high-efficiency water heaters, boilers, furnaces, and central air conditioners; and geothermal heat pumps. To earn the credit, the improvements must be made this year or next year. The maximum credit for both years is $500, of which expenses for windows can provide no more than $200. Manufacturers of these products may certify them as eligible for the tax credits, in which case the homeowner can rely on the certification to claim the credit. See the IRS press release and the full IRS guidance (PDF 37 KB).
To help homeowners take advantage of the energy efficiency tax credits, the Alliance to Save Energy (ASE) has created a special tax credits Web site. ASE has also issued state-by-state energy saving tips for 37 states and the District of Columbia, and has published a free consumer booklet of energy saving tips called "Power$mart: The Power Is In Your Hands." See the ASE Energy Efficiency Tax Credits Web site, the ASE press release and the ASE press release and Web site for the Power$mart booklet.