Tax Breaks for Going Green

Going green isn’t just the next big thing—it’s the wave of the future. There is abundant information available about ways in which you can reduce your carbon footprint, save money and feel better about your role in the stewardship of this planet. Both federal and many state governments recognize the importance of energy savings and conservation and have provided tax breaks and incentives to businesses and individuals to encourage energy efficiency and going green.

Knowing what tax benefits may be available to you when you choose to go green may be enough to help you decide to start your own plan for energy conservation. There are certain tax breaks that are available just for businesses and others that individuals may take advantage of. Here is a discussion of green tax benefits and some of the tax breaks you may qualify for, either as an individual or as a business owner.

Tax Benefits Associated with Going Green

Tax benefits that are associated with going green can be classified as a tax credit, a rebate or savings in the cost of purchase. Tax credits are a dollar-for-dollar reduction of your overall tax bill—if you qualify for a $1000 tax credit, it means you owe $1000 less in taxes. There are also loan and grant programs that states offer to certain businesses that serve as an incentive to encourage the use of alternative energy and green certified building materials in new building construction and renovations.

If you choose to install an energy efficient solar hot water heater, solar equipment that generates electricity or even a wind turbine before December 31, 2016, you may be eligible for tax credits associated with these installations.

Green Tax Breaks for Individuals

Green tax breaks that are available for individuals come in the form of tax credits, rebates or upfront savings. Depending on your tax situation, you may choose a program that offers a tax credit in order to reduce your tax liability. If you have a need for income upfront, a rebate or savings incentive may be in order. The types of programs that are available vary from state to state, so it is a good idea to find information in your local area about incentives that may be available to you as a resident.

For example, residents (including commercial and industrial sector businesses) of the State of California may qualify for a property tax exclusion of up to 100% of the value of the installation of a solar energy system in a new building construction. Illinois residents may receive a special assessment to reduce their property taxes by registering qualified solar energy equipment on their property.

Green Tax Breaks for Businesses

Just as individuals are provided with breaks for going green, businesses may want to get into the act as well. The Tax Relief and Job Creation Act of 2010 helped to extend certain Federal energy tax benefits for businesses. These include tax credits for home builders, manufacturers and commercial buildings. There are also credits available to businesses that use vehicles that are hybrids, electric powered or use alternative fuels. Access to these green energy tax credits for business can be obtained through filing the appropriate form (such as Form 8908 and 8909).

Going green, either as an individual or as a business owner, isn’t just great for the environment, it’s great for your budget. There are numerous tax breaks and incentives available for using more energy-efficient vehicles, sustainable energy, and recycled building materials. Check with an R&G Brenner tax professional to see which tax breaks you might be entitled to.