Top 5 Green Tax Breaks
Conserving energy and reducing household spending maybe reason enough to "go green", but the federal government also occasionally offers tax breaks to encourage taxpayers to make environmentally friendly choices. Some of the most popular green tax breaks expired at the end of 2016, but there are still a few green incentives available to help taxpayers reduce their annual tax bills.
Property owners can get a 30% tax credit when they install solar energy systems in their homes, or in any other buildings they may own. The good news is that there is no upper limit on the cost of the solar energy system, so taxpayers interested in taking advantage of this credit can purchase the best systems within their budget. The tax credit will decrease steadily and expire at the end of the 2021 tax year.
Other Alternative Energy Solutions
Taxpayers may also be eligible for a 30% tax credit for installing wind energy, geothermal heat, or fuel cell and micro turbine systems that run biofuel or natural gas. These types of energy systems are costly, so there's typically no upper limit on the tax credit amount.
Many appliances, home improvement supplies, and heating and cooling systems bear the certified Energy Star logo -- these help homeowners use up to 30% less energy than non-certified versions. Most Energy Star tax incentives expired at the end of 2016, according to Energy Star, but incentives are still applicable to those claiming through the end of that tax year. Energy Star-rated appliances and home improvement items purchased for a taxpayer's primary residence before the end of 2016, and eligible for a tax credit include:
- Heat pumps
- Biomass stoves
- Central air conditioning systems
- Gas, propane, or oil hot water heaters, boilers, and fans
- Building insulation
The government offers tax incentives for plug-in hybrid vehicles and all-electric cars. Taxpayers who own certain makes and models of these cars are eligible for tax credits up to $7,500. Qualified cars are available from some of the most popular brands, including Ford, Mitsubishi, Tesla, and Toyota. The website FuelEconomy.gov maintains a list of all vehicles eligible for tax incentives.
Recycling an electronic device, such as a laptop, computer monitor, tablet, or cell phone, can bring a tax break. Note that this is different from dropping off an old device at the Goodwill or Salvation Army. You'll need to find a nonprofit that specializes in this type of recycling to get a receipt that reflects the market value of the item. Once you get a donation receipt from the recycling company, save it so you can claim it as a charitable contribution when filing your taxes.
Read more on other deductions you don't want to miss.