Need an End-of-Year Tax Deduction?

December/January 2006
Sarah Allen 
home improvement tax deduction, tax deduction, tax, income tax, income tax deduttion,Energy Policy Act of 2005
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Now improving the energy efficiency of your home not only lowers your energy bills every month but pays off at tax time too! The Energy Policy Act of 2005 allows homeowners to claim a tax credit of up to $500 in 2006 and 2007 for home energy efficiency improvements.

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For existing homes, the tax credit is 10 percent of the final cost of qualified energy efficient products for a maximum of $500.

Adding insulation to your home is one of the easiest ways to save money on your utility bills and qualify you for the energy tax deduction, according to the North American Insulation Manufacturers Association (NAIMA). Improved levels of insulation also increase comfort and make other energy efficiency improvements pay off faster.

You should keep your receipts when you purchase the insulation and other energy efficient products that qualify for the tax credit. You also need to get a certification statement from the insulation manufacturer clarifying that the insulation product installed actually qualifies for the tax credit. For the contingencies of qualifying for the tax credit, check the IRS guidelines.

For more information on energy efficiency, read Get Cash Back for Energy Improvements from the August/September 2006 issue of Mother Earth News, visit The Tax Incentives Assistance Project site, or read All About Insulation from the December/January 2002 issue of Mother Earth News.
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2 Comments

  • ERICA jordan 12/26/2006 12:00:00 AM

    At the risk of appearing "offensive", I would like to say that
    the title of the article "Need an End-of-Year Tax Deduction?" is at
    best, misleading.A 10% tax credit isn't even equal to my marginal
    tax income tax rate. Even if it was, the sales tax where I live,
    San Diego, is 7.75%If either the author or the Bush administration
    were serious about a tax deduction to simulate insulation sales,
    the lowest "credit" should be at least the highest marginal tax
    rate plus the sales tax so that every American could at least break
    even.

  • mildreda 12/8/2006 12:00:00 AM

    I have enjoyed these articles very much. I bought this home 13
    years ago. It was built in 1929. I have remodeled-having insulation
    blown into the attic, batting insulation put in the floor joist in
    the dirt basement w/ a thick black plastic x2 for a ground cover. I
    put in basement vents x 8 for air ventilation. I had all the
    windows ( and metal doors) replaced w/ theropane. But have not done
    the walls. Now that I have all this information I am going to have
    insulation blown into the walls and receive my income tax
    credit!!!!!!Thanks.

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