Energy efficiency tax credits are a great way to take advantage of good energy habits to save money on your tax return. In addition to saving money all year round by investing in green appliances, you can also make tax season a little easier on yourself. The largest benefit of energy efficiency tax credits is that they reward your good energy behavior and thereby encourage energy-saving measures to be taken.
We have written before about the importance of investing in ENERGY STAR-approved appliances. In addition to saving you a great deal of money over time with their energy efficiency, some of these appliances also qualify you for federal tax credits. For example, during the 2015 tax season, renewable technologies including geothermal heat pumps, small residential wind turbines, solar energy systems, and fuel cells (both residential and microturbine systems) all qualify for federal tax credits.
These tax credits commonly amount to 30% of the cost of the renewable technology purchase, though sometimes there is an upper limit.
One important thing to note about most energy efficiency tax credits: you generally won’t be able to get any money in the form of a refund from them. For example, if you owed $2,000 on your tax return, but are also eligible for a $3,500 tax credit, you would only receive $2,000 to cover the balance on your taxes. However, some tax credits—turbines, for example–allow any remaining balance to be carried over into the next tax year.
If you would like to learn more about energy efficiency tax credits, check out the Energy.gov website.
Finally, remember that you can visit the IRS website to access all of the necessary documentation to apply for these tax credits.