Green Living – Save Taxes With Hybrids, Insulation And More!
Taxpayers who are friendly to the environment may just find that the environment can be friendly to them as well – in the form of savings on their next tax return.
Geared towards environmentally savvy citizens, many of these tax breaks were introduced in 2006 as a means to encourage Americans to save money by saving the environment. From purchasing a hybrid car to utilizing energy efficient products for the home, there are a number of ways that taxpayers can take advantage of these savings.
These tax credits are aimed at consumers who purchased big-ticket items geared towards energy savings during the last year. Heat pumps, insulated windows and hybrid cars are just a few of the items that fall under this category.
It is important to note that there are a few credit requirements on some of the smaller items. For example, there is a $300 credit limit for the purchase of central heating and air conditioning units and a $150 credit limit for certain types of furnaces. These credits are often utilized by homeowners who were already taking advantage of ways to make their homes more energy efficient and are simply able to take advantage of the savings at tax time.
However, legislators were hoping to encourage a new influx of energy-efficient improvements, both on the home and vehicle front, when they passed these tax-saving initiatives. This is why they made the credits easy to obtain and extended them to include a wide range of improvements.
It should be noted that the larger the improvement tends to be, the more of a savings the taxpayer can expect to receive. For example, tax credits of up to 30% of equity gained in homes using solar energy as a form of electricity generation. Hybrid car credits can sometimes extend up into the $3,000 range, depending on the level of fuel economy in comparison to cars of equal size.
Particular hybrid credits will begin to be phased out after automobile makers reach a certain amount of hybrids sold, so it’s prudent for taxpayers to take advantage of this opportunity while it still exists. Additionally, the credit only extends to those vehicles that the IRS has certified for the hybrid credit, which includes the Toyota Prius, the Honda Civic Hybrid and the Honda Insight. To see if you qualify for this credit, check to see if your ride is on this list of tax saving vehicles.
Before you go off making improvements on Uncle Sam’s dime, check the IRS guidelines, as certain “go green” credits will be ending as of this calendar year, while others have been extended into next year and beyond. While taking steps to make your home more energy-efficient, you only add to its value while lessening your carbon footprint environmentally.
