Green Tax Breaks: Are You Claiming All the Credits You Deserve?
In recent years, the IRS has offered "green" tax credits to individuals who purchase qualifying residential energy-efficient equipment and certain electric vehicles. Some of these breaks expired at the end of 2016. But others are still ripe for the taking in 2017 and beyond. Here's what you need to know to take advantage. Residential Solar Energy Credit You can claim a federal income tax credit equal to 30% of expenditures to buy and install qualifying energy-saving solar equipment for your home. Because this gear is expensive, it can generate big credits. And there are no income limits — even billionaires are eligible for this tax break. The 30% credit is available through 2019. In 2020, the credit rate drops to 26% and then to 22% in 2021. After that, the credit is scheduled to expire. The credit can be used to reduce both your regular federal income tax bill and your alternative minimum tax (AMT) bill, if applicable. The credit equals 30% of qualified expenditures (including costs for site preparation, assembly, installation, piping and wiring) for the following: Qualified solar electricity generating equipment. This must be installed in a U.S. residence, including your vacation home. You must use the residence personally; so, the credit can't be claimed for a property that is used exclusively as a rental. Qualified solar water heating equipment. This also must be installed in a U.S. residence, including your vacation home. To qualify for the credit, at least half of the energy used to heat water for the property must be generated by the solar equipment. The credit can't be claimed for a property that is used only as a rental. Also, you can't claim the credit for equipment used to heat a swimming pool or hot tub. No credit is allowed unless the equipment is certified for performance by the nonprofit Solar Rating & Certification Corporation or a comparable entity endorsed by the state where your residence is located. Keep the certification with your tax records. You can only claim the credit for expenditures on a "home," which can include a house, condo, co-op apartment, houseboat, or mobile home, or a manufactured home that conforms to federal manufactured home construction and safety standards. Keep track of how much you spend, including any extra amounts for site preparation, assembly, and installation. Also record when the installation is completed, because you can claim the credit only in the year when the installation is complete. In addition, ask your tax advisor whether you're eligible for state and local tax benefits, subsidized state and local financing deals, and utility company rebates. Credit for New Plug-In Electric Vehicles Another green tax break that's still available for 2017 and beyond is the federal income tax credit for qualifying new plug-in electric vehicles. The credit can be worth up to $7,500. To be eligible for the credit, a vehicle must:- Be new (not used or rebuilt),
- Draw propulsion from a battery with at least four kilowatt hours of capacity,
- Use an external source of energy to recharge the battery (thus the term "plug-in"),
- Be used primarily on public streets, roads, and highways,
- Have four wheels,
- Meet applicable federal emission and clean air standards, and
- Be used primarily in the United States.
Make and Model | Credit |
BMW i3 | $7,500 |
Chevrolet Bolt | $7,500 |
Fiat 500e | $7,500 |
Ford Focus Electric | $7,500 |
Hyundai Ioniq Electric | $7,500 |
Kia Soul EV | $7,500 |
Mercedes-Benz B-Class EV | $7,500 |
Nissan Leaf | $7,500 |
Tesla Model S | $7,500 |
Tesla Model X | $7,500 |
Make and Model | Credit |
Audi A3 e-tron | $4,205 |
BMW i3 (with range extender) | $7,500 |
BMW i8 | $3,793 |
Chevrolet Volt | $7,500 |
Chrysler Pacifica | $7,500 |
Ford C-Max Energi | $4,007 |
Ford Fusion Energi | $4,007 |
Hyundai Sonata Plug-In Hybrid | $4,919 |
Kia Optima Plug-In | $4,919 |
Toyota Prius Prime | $4,502 |
Volvo XC90 T8 | $4,585 |
- Qualified solar electricity generating equipment,
- Qualified solar heating equipment,
- Qualified wind energy equipment,
- Qualified geothermal heat pump equipment, and
- Qualified fuel cell electricity generating equipment. (The maximum credit is limited to $500 for each half-kilowatt of fuel cell capacity.)
- Advanced main air circulating fans,
- Natural gas, propane, and oil furnaces and hot water boilers,
- Electric heat pumps,
- Electric heat pump water heaters,
- Biomass fuel stoves,
- High-efficiency central air conditioners,
- Natural gas, propane and oil water heaters,
- Energy-efficient windows, skylights and doors,
- Energy-efficient roofing products, and
- Energy-efficient insulation.