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The Energy Act of 2005 carries many new incentives for energy companies to boost energy production and efficiency. It also includes new and substantial tax incentives for individuals to make energy saving improvements to their homes. The incentives come in the form of tax credits, which reduce your federal tax bill on a dollar-for-dollar basis. The credits are not phased out at higher income levels.
You will be able to claim a tax credit for buying and installing certain energy saving improvements in your primary residence. The manufacturer of the improvements will likely certify that the item qualifies for the credit.
The lifetime maximum credit is $500 of which only $200 credit can be for windows.
Some of the improvements that may qualify you for the tax credit include: insulation, exterior windows, exterior doors, certain heating and cooling systems as well as water heating systems and certain air-circulating fan systems.
There are also annual credits that one can claim for certain solar equipment and installation.
Please see the manufacturer of your energy efficient improvements to determine whether it qualifies you for an Energy Act of 2005 credit.
In need of accounting serves? Please contact our office to talk to one of our professionals about your accounting needs and how we may be of service.
Posted: January 2006