If your 2006 income taxes are grim, look on the bright side: You’ve still got several months to go green and save some in 2007. The Energy Policy Act of 2005 gives you until December 31, 2007, to improve your home’s energy efficiency and get a break on your federal income taxes. You have until 2010 to buy an alternative-fuel car and qualify for federal financial incentives.
Home improvement products must meet strict guidelines. Only your primary residence qualifies, and some products are subject to a total maximum credit of $500. For specifics, go to www.EnergyStar.gov and search for “tax credits.” In addition, check with your utilities provider; some states offer additional tax credits and deductions, rebates, freebies or other incentives on energy-efficient home improvements and products such as compact fluorescent light bulbs (CFLs).
Windows
Tax Credit: 10 percent of cost, up to $200, for all windows, skylights and storm windows
Notes: Installation costs are not included. Energy Star windows qualify; subject to $500 Max
Doors (exterior or storm)
Tax Credit: 10 percent of cost, up to $500
Notes: Energy Star doors quality (except in parts of California); subject to $500 max
Insulation
Tax Credit: 10 percent of cost, up to $500
Central air conditioning, geothermal heat pump or air-source heat pump
Tax Credit: $300
Notes: Not all Energy Star products qualify; subject to $500 max
Furnace (gas, oil or propane) or hot water boiler
Tax Credit: $150
Notes: Not all Energy Star products qualify; subject to $500 max
Water heater
Tax Credit: $300
Notes: Check for qualifications. Only certain brands of tankless water heaters qualify; subject to $500 max
Solar systems (hot water, photovoltaic)
Tax Credit: 30 percent of cost, up to $2,000
Notes: At least half the home’s energy must be provided by the sun. Swimming pools and hot tubs are not eligible.
Fuel cells
Tax Credit: 30 percent of cost, up to $1,000 per kW of power
Notes: At least 30 percent efficiency and capacity of at least 0.5 kW
Cars (hybrid gasoline-electric, diesel, battery-electric,, alter-native, fuel cell)
Tax Credit: Varies; based on a detailed formula
Notes: Must be purchased new. Strict criteria; manufacturer or dealer provides proof of qualification for tax credit. See www.HybridCars.com and click on “Incentives,” or check www.IRS.gov and search for “hybrid vehicles.”
