As you organize your papers and get ready to file your taxes this year, take a moment to stop and think about what you could subtract from your payment to Uncle Sam by taking advantage of “green” tax credits. Did you make any energy-efficient home improvements in 2016? You can give yourself a pat on the back if you did, as many of these improvements can help you lower the amount you pay in taxes this April, in addition to helping the environment. Read on to see if you’re eligible for energy efficiency tax credits this tax season.
What Are Tax Credits?
Tax credits reduce what you owe to the government dollar for dollar, according to TurboTax. So if you get, say, a $50 tax credit, you’ll owe $50 less on your income taxes. There are various available tax credits related to energy efficiency that work as incentives for taxpayers to improve their homes by “going green.”
Check out the information below on the federal tax credit you might qualify for if you went green in 2016, as well as more on how to find out about state and local energy-efficiency incentives.
The Residential Energy Efficient Property Credit equals up to 30% of the cost of installing energy-efficient equipment such as fuel cells, solar hot water heaters and electric equipment, and wind turbines, according to the IRS. It also covers certain building improvements. The U.S. Department of Energy notes that the credit covers a certain percentage of the cost of making home improvements, such as adding a metal or asphalt roof or energy-efficient windows.
While some credits have a maximum dollar amount that you can claim for the year or over the course of your life, this credit doesn’t have a limit for most qualifying improvements. Fuel cells do have a limit, though, depending on how much energy they produce. While taxes on both new construction and existing homes qualify for this credit, note that the credit is expiring, so 2016 is the last year that you’ll be able to claim it.
State and Local Savings
While the Residential Energy Efficient Property Credit may be the only federal renewable energy tax credit available for 2016, various state and local governments have implemented additional incentives for making “green” improvements to your home or business.
The N.C. Clean Energy Technology Center at North Carolina State University maintains what it calls the Database of State Incentives for Renewables and Efficiency. The database allows you to look up the tax credits and other incentives that are available for individuals and businesses in your area.
Just click on your state on the map on the website’s main page, and start exploring how you can save money! In addition to tax incentives, the database also lists various grants that are available from state and local governments as well as from private businesses, so you may be able to find other ways to cash in while becoming more energy efficient, aside from claiming them on your taxes. For instance, the database lists DTE Energy, an energy company here in Southeast Michigan, as a possible source of financial help with buying new “green” appliances because the company offers a rebate program for purchasing energy-efficient appliances.
Not all energy-efficient improvements qualify for tax credits, but some of them can still save you money on your gas and electric bill, and they may even help you sell your home faster. Check out some ways to “go green” at home on the Zing Blog, and let us know in the comments below if you’ve found useful local tax credits that have allowed you to save cash while making your home or business more energy-efficient.
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