Save Money and Energy with New Tax Credits

By Megan Phelps
Published on November 24, 2008
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ISTOCKPHOTO/RYAN KELLY
New tax credits mean more money back for people who purchase solar panels, wind turbines, woodstoves, energy efficient windows and more.

Good news! Renewable energy systems just got a little more affordable. Thanks to federal tax credits that will go into effect in January 2009, U.S. homeowners can get money back if they purchase wind turbines or solar panels next year. There are tax credits for energy efficiency, too — including projects such as adding more insulation to your home, or buying energy-efficient windows.

All this is good news for the planet, because it encourages renewable energy and reduces the use of polluting fossil fuels. It’s also good news for your wallet, because over time, these types of energy upgrades can save you a lot of money.

How do the savings add up?

Whether you’re buying a wind turbine or new windows, most home energy upgrades require spending money now to save money later through reduced energy bills. Some of these projects are big investments, costing thousands or even tens of thousands of dollars.

How it all pencils out will depend on the details of your project, but with the new federal tax credits you can count on getting some money back quickly. The tax credits for energy efficiency cover up to 10 percent of many home improvements, up to a total of about $500. Even better, the new tax credits cover 30 percent of the cost of most new renewable energy systems — which can add up to thousands of dollars. For example, the maximum tax credit for installing a wind turbine is $4,000.

(Ed. Note: The economic stimulus bill passed in February of 2009 made some of these credits even better. The increased credits cover 30 percent of the cost of energy efficiency improvements, up to a total of $1,500. Read more details here.)

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