You could be eligible to receive a sizable tax return if you invested in an electric vehicle, geothermal heat pump, or fuel cell system in 2012. Even though many tax incentives for energy-saving home upgrades have expired, tax credits for these big-ticket items will help ease the burden of your investment while you enjoy the benefits of lower energy bills from reduced energy consumption.
Electric Vehicle Tax Credit
Certain electric vehicles acquired after 2009 are eligible for up to $7,500 in tax credits. Qualified Plug-In Electric Vehicle Credit (Section 30D of the tax code)states that a vehicle drawing propulsion energy from a 5 kilowatt (kWh) battery qualifies for a $2,500 tax credit. The credit increases by $417 for each additional kWh of battery capacity up to $7,500. A complete list of vehicles eligible for this tax credit is available at fueleconomy.gov.
While 30D does not have a set expiration date, be sure to take advantage of the credit while it is still in full effect. A one-year phase-out period begins the calendar quarter after a total of 200,000 qualified electric vehicles have been sold.
Geothermal Energy Tax Credit
Geothermal heat pumps installed anytime since 2009 in your main or second home qualify for a federal tax credit. These geothermal heat pumps are similar to traditional heat pumps, but use the earth’s natural heat to control the temperature of your home more efficiently. The federal government is offering a tax credit of 30% of the installation costs, with no upper limit.
All ENERGY STAR geothermal pumps qualify and are over 45% more efficient than standard models. Visit the ENERGY STAR website for more detailed information on qualified heat pumps and tax filing.
Fuel Cell Systems Tax Credit
Installing residential fuel cell systems provides another opportunity for homeowners to save money and utilize federal tax incentives. Fuel cells produce electricity through a chemical process of combining oxygen with hydrogen extracted from natural gas or propane. While these systems can be expensive, they also can:
- Supply a steady portion of the home’s electric energy needs,
- Allow for excess electricity to be sold back to the local utility, and
- Power the home during power outages.
The tax credit covers 30% of installation costs (up to $1,000 per kWh) for fuel cell systems placed in service in 2009 or later on a non-business property. Learn about fuel cell qualifications from the U.S. Fuel Cell Council fact sheet on Federal Fuel Cell Tax Incentives.
Status of Other Home Energy Efficiency Tax Credits
While renewable energy tax credits for small, residential wind turbines and for solar energy systems are still in place for upgrades made in 2009 or later, many familiar home efficiency tax credits expired in 2011. Efficiency installments that were formerly eligible for tax credits included qualified insulation materials, electric heat pumps, asphalt roofs with cooling granules, and central air conditioning.
Take Action NOW
Take action now and urge Congress to reinstate the tax incentives that encourage home energy efficiency investments and put money back into consumers’ pockets.