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Environmental Tax Breaks

April 21, 2016

Saving the environment sometimes has the added benefit of paying less in taxes. Individuals and businesses purchasing or using energy-efficient systems may be able to reduce their tax liability. Here are the environmental tax breaks that taxpayers can use in 2016:

Tax Credit for Renewable Home Energy Systems

This tax credit helps to save 30 percent of the cost of a renewable energy system such as hot water heaters, solar electric equipment and wind turbines. Many taxpayers can use this tax credit, as it applies to any home owned by the taxpayer and is not limited to the primary residence. New construction is included. However, rented homes do not qualify. This credit expires on December 31, 2016, if not extended. This tax credit has no upper limit.

Another tax credit helps to cover 30 percent of the cost of a residential fuel cell and micro-turbine system. There is no upper limit. However, it can only be claimed on the primary residence. Existing homes and new construction qualify; however, rental homes and second homes do not. The credit is available through 2016.

A tax credit is also available on residential small wind turbines. This credit covers 30 percent of cost, and has no upper limit. Existing homes, new construction, principal residences and second homes qualify. It is available through 2016.

Taxpayers can save 10 percent of the cost of up to $500, or a specific amount from $50 to $300, on the following:

  • Biomass stove
  • Air source heat pump
  • Central air conditioning
  • Gas, propane, or oil hot water boiler
  • Gas, propane or oil furnaces and fans
  • Insulation
  • Roofs
  • Water heaters (non solar)
  • Windows, doors and skylights

This tax credit applies only to existing homes and primary residences. It does not apply to new construction and rentals.

Tax Credits for All-Electric Vehicles

Fuel cell motor vehicles or all-electric vehicles can qualify for a tax break. The battery capacity of the vehicle determines the amount of the tax credit. The credit may be anywhere between $2,500 and $7,500. To find out if your vehicle qualifies for this credit, visit U.S. Department of Energy’s Fuel Economy.

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