Winner of the Well Workplace Small Business Award

 

September 4, 2005 - What is this Energy Bill I have heard about? Is there anything I can do to save some money on my taxes?

Yes, what you have heard is that on August 8, 2005, President Bush signed the Energy Tax Incentives Act of 2005. According to a White House press release, the Act will "encourage energy efficiency and conservation, promote alternative and renewable energy sources, reduce our dependence on foreign sources of energy, increase domestic production, modernize the electricity grid, and encourage the expansion of nuclear energy."

Although many of the Act’s provisions impact a relatively narrow group of taxpayers (for example, nuclear power plants, coal facilities, etc.), there are some provisions that impact individuals and small businesses. Here are highlights of provisions that may impact individuals and small businesses:
Makes tax credits available for the purchase of a variety of energy efficient vehicles such as hybrid, fuel cell, advanced lean burn technology and other alternative power. The size of the credit varies depending on the weight class of the vehicle and the rated fuel economy. These are effective for vehicles placed in service after 2005. For hybrid vehicles (for example, the Toyota Prius and other hybrid cars), the credit will typically range from $650 to $3,400. This replaces the current deduction of up to $2,000 allowed for the purchase of hybrid vehicles.

Provides 30% tax credit available for the purchase of a variety of energy saving applications in your home such as solar water heating, photovoltaic equipment, and fuel cell property. The maximum credit is $2,000 (for solar equipment) and $500 for each .5 kilowatt of capacity (for fuel cells). Credit applies to property placed in service after 2005 and before 2008.

Creates a 10% tax credit available for the cost of energy efficient home improvements (for example, exterior windows, doors, insulation, etc.) and 100% of the cost of qualified residential energy property (for example, qualified electric heat pumps and hot water boilers). The credit applies to improvements made after 2005 and before 2008 and the lifetime credit limit is $500 ($200 for windows).

Establishes a business tax credit for the construction of new energy efficient homes. A maximum $1,000 credit applies to manufactured homes meeting a 30% energy reduction standard and a maximum $2,000 credit for other homes meeting a 50% standard. Applies to homes sold after 2005 and before 2008.

Provides a business tax credit for qualified energy-saving improvements to commercial buildings that meet a 50% energy reduction standard. The maximum deduction is $1.80 per square foot of the building. Applies to improvements made after 2005 and before 2008.

Allows a tax credit available for the production of energy efficient dishwashers, clothes washers, and refrigerators manufactured in 2006 and 2007.

There are other tax incentives and credits that you can gain information about at http://www.whitehouse.gov/news/releases/2005/07/20050729-9.html

Return to Tax Talk.