OTHER NEWS
Take energy-saving steps this year
to reap tax savings next year

The recently enacted 2009 American Recovery and Reinvestment Act (ARRA) contained a number of either new or expanded tax benefits on expenditures to reduce energy use or create new energy sources.

The Internal Revenue Service reminds businesses and individual taxpayers that many energy-saving steps taken this year may result in bigger tax savings next year. The IRS encourages businesses to explore whether they are eligible for any of the new energy tax provisions. Key energy provisions include the following:

Residential Energy Property Credit increases the energy tax credit for homeowners who make energy efficient improvements to their existing homes by increasing the tax credit rate to 30 percent of the cost of all qualifying improvements (such as adding insulation, energy efficient exterior windows and heating and air conditioning systems) and raises the maximum credit limit to $1,500 in service in 2009 and 2010. The IRS will issue guidance that will allow manufacturers to certify that their products meet these new standards. The Residential Energy Efficient Property Credit as outlined in Section 1122 will help individual taxpayers pay for qualified residential alternative energy equipment such as solar hot water heaters, geothermal heat pumps and wind turbines.

Plug-in Electric Drive Vehicle Credit modifies the credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. Review other details found in Section 1141 of the new law. Conversion Kits are also provided a tax credit for plug-in electric drive conversion kits. A taxpayer may also claim this credit even if a hybrid vehicle credit was claimed for the same vehicle in an earlier year.

New Clean Renewable Energy Bonds available to issue to be used to finance certain types of facilities that generate electricity from renewable resources (for example, wind and solar) has been increased from the one-time nation limit of $800 million to $2.4 million; a similar increase applies to Qualified Energy Conversion. These qualified tax credit bonds can be issues to finance governmental programs to reduce green house gas emissions and other conservation purposes.

Repeal of Certain limits on Business Credits for Renewable Energy Property is also provided in the ARRA. The new law repeals the $4,000 limit on the 30 percent tax credit for small wind energy property and the limitation on property financed by subsidized energy financing. Business taxpayers also can apply for a grant instead of claiming either the energy investment tax credit or the renewable energy production tax credit for property placed in service in 2009 or 2010.

An IRS Fact Sheet on Energy Provisions of the American Recovery and Reinvestment Act of 2009 at http://www.irs.gov/newsroom provides a complete listing of ARRA energy provisions.