Since 2005 consumers and businesses have been able to save money on their federal income taxes for a variety of energy efficiency investments. Here is a brief list; for more information on efficiency criteria, eligible homes and vehicles, incentive amounts, etc., we refer you to the links below. Some states and utilities offer tax incentives or rebates for efficient products as well.
Current incentives
On-site renewables and efficiency (residential energy-efficient property)
Similar tax credits for homeowners and businesses for up to 30% of the cost of new:
- Geothermal heat pumps
- Fuel cells and microturbines
- Solar electric and hot water systems
- Small wind turbines
- Combined heat and power systems (only for businesses, up to 10% of cost)
Electric and plug-in hybrid vehicles
A tax credit for buyers of new electric and plug-in hybrid vehicles up to $7,500
Incentives through 2017
These incentives expired at the end of 2017 but can still be claimed on 2017 or prior tax returns (they have been extended multiple times, and could be again).
Home improvements (nonbusiness energy property)
A tax credit for homeowners for up to $500 for installing in existing homes:
- Efficient insulation, windows, and roofs (up to 10% of cost)
- Efficient heating ($150), air conditioning ($300), and water heaters ($300)
New homes
A business tax credit of $2,000 for builders of efficient new homes (and $1,000 for some manufactured homes)
Commercial buildings
A business tax deduction of up to $1.80/square foot of building space for a new or retrofitted commercial building with efficient lighting, heating and cooling system, or building shell; includes a $0.30-0.60/sf deduction for lighting improvements
Electric 2- and 3-wheel vehicles
A tax credit for buyers of new 2- and 3-wheel plug-in electric vehicles up to $2,500
Electric vehicle charging stations
A tax credit for new alternative fuel vehicle refueling equipment, including electric charging stations, up to 30% of the cost (capped at $1,000 for individuals, $30,000 for businesses)
Expired incentives
These incentives were mostly enacted in 2005, but were allowed to expire.
Appliances
A business tax credit for manufacturers of efficient refrigerators, clothes washers, and dishwashers
Hybrid vehicles (light-duty and heavy-duty)
Tax credits for buyers of hybrid-electric cars, SUVs, trucks, buses, and plug-in hybrid conversion kits
Further information:
- ENERGY STAR: https://www.energystar.gov/about/federal_tax_credits?s=mega
- NC State University/DOE: http://programs.dsireusa.org/system/program?state=US
- EPA/DOE: https://fueleconomy.gov/feg/taxcenter.shtml
- IRS: https://www.irs.gov/Form5695 and https://www.irs.gov/Form8936
Please note that these tax incentives have been updated and extended multiple times, and these and other websites may not be fully up to date.
While we have made great effort to describe these tax incentives accurately, we cannot provide tax advice and suggest you contact a tax professional with any questions specific to your situation.
