Going Green Tax Incentives

1. Going GreenTax Incentives • Federal Tax Savings come in two forms - • Tax Credit • Tax Deduction Nancy J. Hall, CPA

2. Going GreenTypes of Tax Incentives • Tax Credit • One-for one dollar reduction in your total tax liability (most beneficial) • Tax Deduction • Reduces your taxable income which is then used to calculate your tax liability Nancy J. Hall, CPA

3. Going GreenTax Incentives • Energy Policy Act of 2005 • Provides a deduction for energy-efficient commercial building property expenditures. • American Recovery and Reinvestment Act of 2009 • Provides for various tax credits and incentives related to renewable energy, energy-efficient homes and electric vehicles. Nancy J. Hall, CPA

4. Going GreenEnergy Policy Act of 2005 • Type of Property: • Commercial • Type of Expenditures: • Interior lighting systems • Heating, cooling, ventilation, hot water systems or • Building envelope Nancy J. Hall, CPA

5. Going GreenEnergy Policy Act of 2005 continued • When Allowed: • Year in which the property is placed into service • Location of Property: • United States • Placed in Service Dates: • January 1, 2006 and prior to January 1, 2014 Nancy J. Hall, CPA

6. Going GreenEnergy Policy Act of 2005 continued • Tax deduction amount: • $0.30 - $1.80 per square foot, depending on technology and amount of energy reduction (not to exceed actual cost of installation) • Certification Requirements: • Use qualified software and eligible certifier Nancy J. Hall, CPA

7. Going GreenAmerican Recovery and Reinvestment Act of 2009 • Tax credits and incentives: • Renewable energy and production tax credit (wind facilities) • Energy from solar facilities investment tax credit in lieu of production tax credit • Business energy credit (related to wind property) • Energy-efficient homes • Residential energy property • Alternative fuel pumps (refueling property) • Investment in advanced energy facilities • Vehicles Nancy J. Hall, CPA

8. Going GreenAmerican Recovery and Reinvestment Act of 2009 continued • Energy-efficient homes for home owners • Extends the tax credit for improvements to energy-efficient existing homes through 2010 • For 2009 and 2010, the amount of the tax credit is increased from 10% to 30% of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements during the tax year • The property-by-property dollar caps on the tax credit are also eliminated, and an aggregate $1,500 cap applies to all property qualifying for the credit • New homes – does not qualify for tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters • Go to www.energystar.gov Nancy J. Hall, CPA

9. Going GreenAmerican Recovery and Reinvestment Act of 2009 continued • Energy-efficient homes credit for home builders • $2,000 or $1,000 credit for a certified dwelling unit. • For homes substantially completed after August 8, 2005 but before 2010 and acquired by sale or lease by an individual during the tax year for use as a residence. • Eligible contractor is the person that constructed a qualified energy efficient home. • Qualified energy efficient home: • Located in the United States • Completion dates above • Meets certain energy saving requirements • Construction includes substantial reconstruction and rehabilitation Nancy J. Hall, CPA

10. Going GreenAmerican Recovery and Reinvestment Act of 2009 continued • Energy-efficient homes credit for home builders continued • Energy Saving Requirements: • Annual level of heating and cooling energy consumption at least 50% below the annual level of heating and cooling energy consumption of a comparable dwelling unit and has a building envelope component improvements that account for at least 1/5 of the 50% reduction in energy consumption. • The credit is $1,000 for a manufactured home that does not meet the 50% energy saving requirement but is certifed to have an annual level of heating and cooling energy consumption at least 30% below the annual level of heating and cooling energy consumption of comparable dwelling unit and has a building envelope component improvements that account for at least 1/3 of the 30% reduction in energy consumption. Nancy J. Hall, CPA

11. Going GreenAmerican Recovery and Reinvestment Act of 2009 continued • Residential energy property • The new law removes the dollar limitations on certain energy credits, e.g., for qualified small wind energy property; for qualified solar water heating property; and qualified geothermal heat pumps Nancy J. Hall, CPA

12. Going GreenAmerican Recovery and Reinvestment Act of 2009 continued • Vehicles • Tax credit for purchases of plug-in electric drive vehicles ranging from $2,500 to $7,500 depending on battery capacity. The first 250,000 vehicles sold get the full tax credit (then it phases out like the hybrid vehicle tax credits). • Tax credits are available to buyers of hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles. The tax credit amount is based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models. These credits are available for vehicles placed in service starting January 1, 2006. For hybrid and diesel vehicles made by each manufacturer, the credit will be phased out over 15 months starting after that manufacturer has sold 60,000 eligible vehicles. For vehicles made by manufacturers that have not reached the end of the phase-out, the credits will end for vehicles placed in service after December 31, 2010 Nancy J. Hall, CPA