No Jitter is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Federal Tax Credits For Energy Efficiency

Visit the Energy Star website for new details on tax credits for energy efficiency for consumers and businesses.Remember from my past experiences that your improvements "must be placed in service" the same year you claim the credit. Only years 2009 and 2010 have restrictions on the type of improvements. For commercial systems there are specific guidelines that you must meet in order to claim the deductions and for heating and cooling commercial spaces; the deductions run through December 31, 2013.

You can break your improvements into chunks of tax years. Buildings don't have one heating or cooling system unless they are small. Each tax credit category has an expiration or limitation in the credit. So if you are a consumer and want to replace all your windows then consider doing it over the next two years. Why? Because they max out the deduction at $1500 for each year. For businesses your investments in energy efficiency can cycle around fiscal years and budget limitations. Watch out for gotchas such as leasing--the IRS gets touchy on this, especially if it involves hybrid or electric vehicles, because the tax credit goes to the leasing company.

There are two other areas to examine to get the most of your energy investments and one of them is under the IRS Tax Incentives For Distressed Communities and Section 179. Depending upon your filing status and of course advice from your tax and accounting folks--you may be able to capture the full investment as an expense (deduction) in the same year without depreciating it. Years 2009 and 2010 are simple improvements while years 2009-2013 (commercial) and 2009-2016 (consumer) are major investments and substantial tax credits. The investment in energy efficiency can be very attractive, at least when it comes to taxes and making the claim that your organization is greening itself.

For your entertainment purposes, read how legislators are investing in what they want to legislate. What to watch out for in the coming months is more local legislation followed by new federal legislation and guidelines concerning energy and emissions. Local jurisdictions are already implementing measures such as "energy audits" as a requirement in pre-settlement of homes in Austin, Texas. The energy cap and trade and Renewable Energy Credits (RECs) tossed around by the federal government aren't enough to significantly impact environmental and energy concerns fast enough. For enterprise, it sums up to not getting caught in a tax trap or penalty because you are either using too much energy or not spending enough on countermeasures to use less energy and create less carbon impact. Either way, you will pay now or later. Anticipate paying more, a lot more, if you wait. Then you must be able to navigate the jurisdictional landscape cluttered with existing and pending legislation, and this remains complex because the policies are misaligned between the local, state and federal governments. Energy issues and concerns including the traded futures will remain highly volatile and reactionary for some time to come and as I've stated in the past--legislation is coming, only now it's sooner than you think. I can't recall any better incentives or numbers and combinations of incentives to earn tax benefits for energy efficiency for consumers and businesses.