Legislative Update on Federal Energy Efficiency Tax Incentives
February 17, 2009: Stimulus Package Extends, Enlarges Energy Efficiency Tax Incentives
Congress passed an economic stimulus package over the weekend that does much to promote energy efficiency. The American Recover and Reinvestment Tax Act of 2009 includes several provisions modifying and expanding the scope of the energy efficiency and renewable energy incentives. A few notable changes:
- Energy efficiency incentives for upgrades to existing homes have been extended, and are now available for 2009 and 2010.
- The financial cap for these incentives, which cover home envelope improvements as well as heating, cooling and water heating equipment, was increased to $1,500 (from $500).
- Lower caps, such as the $200 cap on new windows, have been abolished. The existing home incentives are now calculated at 30% of the cost of the installation (labor and equipment), up to the $1,500 cap.
- Standards for equipment eligibility have changed – see the individual topic pages on the Tax Incentives Assistance Project (TIAP) site for details.
- On-site renewables (solar photovoltaic and hot water systems, small wind systems, and geothermal heat pumps) are now eligible for a tax incentive worth 30% of the total cost, without a cap.
- There are new incentives for plug-in electric vehicles, and plug-in conversion kits.
TIAP will work to post detailed updates across the various incentive pages in the coming days, at www.energytaxincentives.org.
October, 2008 – Legislative Update
On Oct. 3, 2008, the President signed into law legislation to extend many of the Energy Efficiency Tax Incentives first enacted in 2005 but that expired at the end of 2007 or that were scheduled to expire at the end of 2008. The bill also includes extensions of a variety of renewable energy tax incentives. The energy efficiency provisions include:
- An extension of the commercial buildings tax deduction to the end of 2013.
- An extension of the tax credit for efficient furnaces, boilers, air conditioners, water heaters and insulation and window upgrades to existing homes (covering improvements installed in 2009, but not 2008).
- A one-year extension of the new energy-efficient home tax credit, to the end of 2009.
- Three-years of manufacturer tax credits for sales of high-efficiency refrigerators, clothes washers, dishwashers, and dehumidifiers (2008-2010).
- A new tax credit for plug-in hybrid vehicles purchased starting in 2008 and extending until shortly after the number of qualifying vehicles reaches 250,000.
- A new 10% investment tax credit for combined heat and power systems (through 2016)
- An extension of fuel cell and microturbine credits to the end of 2016.
- Accelerated depreciation for smart meters and smart grid systems.
- Extension of an existing bonding program for green buildings and sustainable design, and establishment of a new energy conservation bond program that would help local and state governments to fund energy conservation efforts.
The bill pays for these provisions by restricting several oil and gas industry tax breaks, and tightening some provisions on the sale of stocks. For specifics on these measures, visit the Tax Incentives Assistance Project.
Additional Activities
- Other Potential Federal Legislation
- Tax Incentives Assistance Project
The Tax Incentives Assistance Project (TIAP), sponsored by a coalition of public interest nonprofit groups, government agencies, and other organizations in the energy efficiency field, is designed to give consumers and businesses information they need to make use of the federal income tax incentives for energy efficient products and technologies passed by Congress as part of the Energy Policy Act of 2005.
- Federal Energy Policy Act of 2005
ACEEE Technical Reports
Additional Resources
and Links
Last Updated 02/17/2009
For more information contact:
Steven Nadel, Executive Director
Sarah Black, Tax Incentives Assistance
Project Coordinator
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