Happy Earth Day everyone. Say what you will about the cost of going green, but there’s no denying that caring for the environment has given taxpayers some pretty sweet tax breaks, credits and deductions over the years. Here are a few you should take advantage of, if you haven’t already:
- Buy a hybrid, get a tax break. Buy two hybrids, get two tax breaks! Depending on the type of hybrid (or lean-burn diesel vehicle), its weight, and the amount of gas it saves, fuel-efficient vehicles will help you deal with gas prices that average $3.50/gallon and can get you a refund from $250 – $3,4000.
- Energy efficient windows, roofs, doors and central air units qualify for a personal tax credit of $500.
- Solar Panels and Solar hot water systems. These technologies will get you a personal tax credit for up to 30% of the installation costs. Pools and hot tubs heated by solar power count too! Many state and local governments also offer tax breaks for solar, so check with your local municipality to see how much you can save.
- Living in the dark? You can get 10% or up to $200 from Uncle sam if you install green windows or skylights that meet IECC standards.
- “Greening up your central air-conditioning unit, utilizing geothermal heat pumps, installing air source heat pumps, putting in a gas, oil or propane water heater or an electric heat pump water heater will entitle you to garner a $300 dollar tax credit for each qualifying improvement.” (howstuffworks.com)
- Federal gas tax holiday. Nope, just kidding. Although some lawmakers like Sen. John McCain (R-AZ) have been fighting to lift federal taxes at the pump from Memorial Day through Labor Day, it’s probably not going to happen. While tax-free gas is a politically popular position (who wouldn’t want to pay $0.18 less per gallon), high prices at the pump come mainly from state and local governments, many of which are still increasing their gas taxes to help heal their crippled budgets (scroll down to a state by state see gas prices map). Moreover, during the 2008 election campaign, a Freakonomics editor posed a challenge to find any coherent economist willing to support a gas tax holiday. None were found. Joushua Schank of the Eno Transportation Foundation elaborates:
“The longer-term view necessitates broader thinking than simply lowering the cost of gasoline. If people feel pain when gas prices rise because they have no alternative, it makes sense to provide grants and incentives for states, cities, and communities to develop alternatives. However, dependence on federal fuel taxes for revenue means that the goals of lowering transportation costs for those who cannot afford to pay more and increasing transportation alternatives are inherently in conflict.
— “An Inherent Conflict of User-Pay,” Joshua Schank, President and CEO, Eno Transportation Foundation, “The Impact of High Gas Prices,” National Journal Transportation Experts Blog, 2011.
Of course the next big green-related tax that’s got everyone talking is the carbon tax. But we may have to wait a few more Earth Days for that one.
- Earth Day Gadgets: Be Green, Save Money (ktla.com)
- Tax credits for going green (dontmesswithtaxes.typepad.com)
- Say Aloha to Solar Tax Credits [Infographic] (joyoftaxlaw.com)
- IMF Wants Americans Taxed $1.40 More Per Gallon Of Gas (godfatherpolitics.com)
- Using a carbon tax to implement energy deregulation (aei-ideas.org)
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.