By Michelle Masson

Over the last 10 years, US renewable energy generation has doubled.  Wind and solar power industries added thousands of jobs and billions of dollars to the US economy.  This growth was nearly reversed with the 2020 COVID crisis but with a new administration in the White House, the industry is expected to grow again, which can create new opportunities for taxpayers.

Current federal incentives include tax credits for both individuals and businesses who invest in environmentally friendly energy resources and vehicles.  There are credits for solar-electric and solar water-heating systems, wind-energy systems, and geothermal heat pumps.  Sadly, the existing incentives are set to expire at the end of 2021 absent an extension from Congress.  For purchases during this year, individuals can claim 22% of the cost of qualifying property as a tax credit on their 1040.

The electric vehicles tax credit is another opportunity for taxpayers looking to purchase a new vehicle.  Credits for vehicle purchases range from $2,500 to $7,500 based on the vehicle itself, but these incentives are set to begin phasing out after the auto manufacturer delivers 200,000 vehicles.  The IRS has a link to all of the car companies and vehicles that qualify for this credit, and the up-to-date credit amount allowed for each model and year: https://www.irs.gov/businesses/irc-30d-new-qualified-plug-in-electric-drive-motor-vehicle-credit.

Individual states also have financial incentives for going green.  These can range from tax deductions and credits to rebates and even loan programs.  More details on all of the available state opportunities can be found at the Database of State Incentives for Renewables & Efficiency website: https://www.dsireusa.org/.

So, if you are thinking about buying a new car or remodeling your house this year, here’s an opportunity to make a purchase that can have a positive impact on the environment AND on your tax return.  If you have any questions about qualifications, please give us a call;  we’ll help you take advantage of these great tax saving opportunities.