Congress recently passed the Energy Tax Incentives Act of 2005.  This legislation provides more than 14-billion dollars in tax breaks primarily for businesses in the energy sector to improve the national power grid.  Such improvements are necessary to prevent major blackouts like those in the Northeast and Midwest two years ago.

But the Act also provides some incentives for individuals and businesses to make certain energy conservation or alternative energy expenditures. While these credits and deductions may not net you a significant tax break, you should consider them if you – or your business – are planning energy-efficient improvements or purchases, and want to save money while doing your part for the environment.

We offer this information to help you understand how the Act may affect you and how you might take advantage of it to reduce your tax liability. As with any new tax legislation, there are certain restrictions and limits such as the total amount of credit available or the types of qualifying products covered.  Call our office or visit our website for more detailed information about the provisions of this legislation.

The Energy Tax Incentives Act comes on the heels of several other major tax acts over the past few years. Plus, Congress will be back in session after Labor Day – and back to work on a variety of additional tax, tax reform and social security reform legislation.  There could be additional tax law changes soon thereafter. 

Decosimo advises individuals and businesses on ways to minimize their taxes and maximize their financial well-being and we'll keep you posted on any changes we think you should know about.  Again, if you have questions about this latest change in tax law or any other tax matter, call us at (423) 756-7100 or (800) 782-8382.  

Summary of Incentives

Individuals
10% credit  for energy efficient home improvements in 2006-2007

• Insulation
• Exterior windows
• Skylights
• Circulating fans
• Hot water boilers
• Heat pumps
• Central air conditioners
• Natural gas, propane or oil furnaces

30% tax credit by installing a solar hot water heater, electricity-generating solar equipment or a fuel cell placed in service in 2006-2007

Businesses
10% to 30% credit for purchase of solar energy property, fuel cell and microturbine power plants placed in service in 2006 and 2007

$2,000 per home constructed in 2006-2007 that meets a 50% energy efficiency standard

$1,000 credit for manufactured homes that meet a 30% energy-efficiency standard

Deduction for the cost of major energy-saving improvements to commercial buildings in 2006 or 2007

Individuals and Businesses
Credits for purchase or lease of hybrid vehicles

Credit for production of energy efficient appliances