Energy Saving Tax Credits

New Tax Credits Will Help You Save Energy
and Lower Your Taxes

Crow Wing Power shares your concerns about the rising cost of energy,
from gasoline to the fuels we use to generate electricity. New tax incentives passed in the federal Energy Policy Act of 2005 are a triple win for
everyone: they promote wise energy use, help lower your energy bills, and
help reduce your tax bill, too.

The new energy law provides valuable federal tax credits for consumers
who make certain, specified energy-efficiency upgrades to their homes, and purchase fuel-efficient hybrid-electric vehicles. The tax credits took effect in January 2006, and most will be available only in 2006 and 2007, unless the Congress extends them.

Federal regulations governing these tax incentives have not all been
released from the Treasury Department/Internal Revenue Service, but we
wanted to get this information to you as soon as possible. We consider
ourselves energy experts, but we are not tax experts. To find out if you qualify
for the new tax credits, look for the relevant IRS tax forms, which will be
published as soon as the rules are finalized, and consult your tax advisor.
At the least, you will need to keep receipts proving that you purchased the improvements.

In some areas of the country, consumers also will be eligible for utility or
state rebates or state tax incentives for the same homes, vehicles and
equipment. Reference information is provided below.

Qualifying upgrades for your home include adding insulation, exterior doors, windows and skylights, and purchasing more efficient heat pumps, central air conditioners, furnaces and water heaters. These must meet Energy Star and other efficiency requirements. Also available are various incentives for commercial buildings, solar energy installations, fuel cells, and purchase of hybrid-electric vehicles.

Businesses are eligible for tax credits for buying hybrid vehicles, for
building energy-efficient buildings, and for improving the energy efficiency
of commercial buildings.

Small-producer biodiesel and ethanol credits will benefit small agri-biodiesel producers by giving them a 10-cent-per-gallon tax credit for up to 15 million gallons of agri-biodiesel produced. In addition, the limit on production capacity for small ethanol producers increased from 30 million to 60 million gallons. This is effective until the end of 2008.

Energy savings are highly dependent on location, type of equipment and
amount of usage. For more information, please consult the following organizations or Web sites:

Alliance to Save Energy
(ASE’s site also links you to information available in Spanish.)

Tax Incentives Assistance Project

Commercial Building Tax Deduction Coalition

U.S. Department of Energy
(DOE’s Office of Energy Efficiency and Renewable Energy)

Internal Revenue Service

Department of Treasury

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Below is a table of anticipated tax savings and energy savings for
energy-efficient home improvements from energystar.com
Federal Tax Credits for Energy Efficiency