Wednesday, February 13, 2008

Going Green Could Pay Off...Literally

We have finally reached the point where being environmentally friendly is trendy. Well, there is now another reason to jump on the bandwagon and go green: money. It would appear that being environmentally minded could save you a couple hundred or a few thousand dollars come tax time.

If you've made energy-saving improvements to your life in the past year, you may get some tax credits on your federal and/or state income taxes.

Let’s start with automobiles. The federal government is now giving you credit off your income tax when you purchase a fuel-efficient hybrid. The specific amount you earn will actually depend on the hybrid you bought. You can reference this IRS chart to find your vehicle. And to think that you bought that hybrid simply to save gas and pollute less. Well, now there’s a tax break in it for you as well.

And the tax break doesn’t stop at the federal level. There are some states that give you a tax break for buying a hybrid car as well. If you have questions regarding what incentives your state might provide, the Department of Energy keeps a database of state incentives and laws related to alternative-fuel vehicles.

The other big area where you might be able to take advantage of a tax break is home energy. Making your house more efficient saves money on your utility bills in the long run, and now can earn you some cash during tax season.

If you upgraded your home's insulation, windows, doors, metal roof, water heater, or heating or cooling system in 2007, you may get a credit of up to $500 off your taxes. The new items have to meet energy-efficiency codes -- this Energy Star chart shows what qualifies.

If you decided to go solar and install solar panels and/or solar water heaters in your home, you are looking at a bigger tax break that could earn you a credit of up to $2,000 off your taxes from the federal government. As far as the state income tax return, many states now offer an array of tax deductions for adding solar energy to your home. The Database of State Incentives for Renewable Energy lists tons of credits, rebates, grants, and more ways to cut the cost of green power.

There are 101 reasons to go green and save our planet. Why shouldn’t money be one of them?

Cheers!
-Taxus

1 comment:

taxrep4u said...

Thanks for the info on how to be green and save at tax time!