Major Green Tax Deductions
Ah, tax season. The time of year where no accomplishment is unworthy of mention if it equals a write-off.
If you’ve taken the time (and money) to invest in energy-efficiency or other green initiatives, there’s likely a deduction for that. Here’s a quick breakdown of what you might be eligible for this year.
Behind the Wheel
First, the good news: If you participated in 2009′s Cash for Clunkers program to get a more fuel-efficient car with government incentive, your $3,500 or $4,500 rebate is not considered taxable income. Imagine how much more you’d have to deduct with this additional income.
While the tax credit for hybrid autos is decreasing, big bucks for plug-in vehicles was included in last year's stimulus package. Photo: Flickr/e-connected
Plus, if you went the whole nine yards last summer and purchased a hybrid car, you’re eligible for an energy tax credit. This means that not only can you potentially drive 1,000 miles on a single tank of gas, but you’ll also receive a financial incentive for it.
According to the Tax Incentives Project, the availability and amount of the credit are unrelated to the type of car that the purchaser replaced, meaning you’re still eligible even if you just traded in your old hybrid for a new one.
Now for the bad news: The hybrid tax credit has been around since 2006 but is now in the process of being phased out, so what once was worth $2,000 is now worth less than $1,000. Keep in mind that 2010 is the last year of eligibility for the tax credit, so if you want any incentive at all for your hybrid, time is of the essence.
But if you made the big splurge and upgraded to an electric vehicle, you qualify for some major dough.
The American Recovery and Reinvestment Tax Act of 2009 (the stimulus package) expanded the credit for plug-in vehicles, and it is now available for a new plug-in electric drive vehicle having a battery capacity of at least 4 kilowatt hours, which qualifies for a credit of $2,500. Each kilowatt hour of battery above this adds $417 to the credit, up to a maximum of $7,500 for vehicles up to 14,000 pounds gross vehicle weight.
Big Breaks at Home
Relax, you don’t need solar panels on the roof to get tax credit for being energy-efficient. In fact, the ENERGY STAR program has an entire Web site dedicated to identifying credits available for your purchases.
The key is that you need to upgrade a product – such as a water heater or air conditioning unit – in your primary home, meaning that new construction or rentals are not eligible. For most products, you can only get a $1,500 tax credit every two years, and it’s based on 30 percent of the cost of the unit.
You could be eligible for tax deductions if you made the switch to energy-efficient lighting in your home. Photo: Flickr/Karin Beil
But the credits are not limited to just appliances. You may qualify for extra money if you have installed insulation or weather stripping, a qualified roof that reflects the sun or even skylights, among many other upgrades. Note that tax credits do not include the cost of installation.
For a full list of your possible tax credits, enter your ZIP code and any upgrades on the ENERGY STAR checklist. You may also qualify for sales tax exemptions, rebates and sponsored recycling programs that will reduce the burden of disposing your old products.
Double- and triple-check your local tax credit descriptions because even the little stuff counts. Here are a couple of quick upgrades you may have overlooked:
- Energy-efficient lighting – Did you make the switch to CFL bulbs or make an LED upgrade?
- New electronics or office equipment – New laptop or desktop computers, printer/scanners, even televisions may be eligible. Last year, the state of California’s Energy Commission implemented energy standards for plasma and liquid crystal TVs.
- Heating and cooling improvements – While programmable thermostats do not qualify, some states will give you tax credit for installing energy-efficient ceiling fans.
If you’re planning on making some home improvements in 2010, do some quick rebate research for next year’s tax season. As always, remember to save your receipts. If you make the upgrade, you’ll have to prove it.
Deductible Donations
It may go without saying that reuse is always the preferred option over tossing. It requires energy and resources to create a new product from recycled material, whereas reuse provides a second life for the same product.
There are plenty of organizations that specialize in offering products for reuse, such as Goodwill and Salvation Army. Plus, the IRS also lets you determine the fair market value of products donated, which can be treated as a tax write-off.
If your items – clothing, toys or even electronics – are still in usable condition, find a local second-hand store and ask if it they are eligible for donation. Don’t forget to ask for the appropriate tax form when you donate your products. Without proof of donation, it will be more difficult to receive a credit.
One area where you should be leery about seeking a tax credit for donation is with carbon offsets. These programs provide an opportunity to invest in renewable energy in order to compensate for the carbon emitted on things like travel. However, it will only be seen as a tax-deductible donation if the group providing the offsets is a nonprofit organization.
Carbonfund.org is one example of a nonprofit that is fighting climate change through carbon offsetting. Your contribution is tax-deductible by law, making it more cost-effective to reduce your carbon footprint while saving money.
If you’re unsure about an organization’s classification, look for the 501(c)(3) notation in the About Us section of its Web site.
As of June 17th 2011 we have upgraded our comment system to use Facebook comments. The below comments are closed and are listed for historical purposes.
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posted on February 15th, 2010 at 1:24 am
[...] Major Green Tax Deductions – Earth911.com [...]
Mike
posted on February 15th, 2010 at 6:47 am
This is good tax news but why are we still pretending it was good for the environment? No offense but I can’t believe anyone is crazy enough to buy a new car right now in this economy. Considering that a healthy chunk of 2010 Cash 4 Clunkers cars have already been repossessed (i.e. repofinder.com) why not just go to local banks and credit unions and buy these repo cars back for half the retail price? If you’re going to buy junk at least don’t over pay.
Major Green Tax Deductions « BioFuel Blog
posted on February 15th, 2010 at 7:27 am
[...] MAKE MY MONEY GREEN [...]
Kathy
posted on February 17th, 2010 at 9:39 am
Hi… great article. I have a blog that is focused on living better in my area (economically depressed before there was a recession – you know the drill) – and one of my key interests is bartering. However, I’m interested in any tactics that create a sustainable lifestyle – whether it’s marketing skills or bringing in money without creating a lot of infrastructure – or using solar tactics for keeping the house comfortable, a la the Maine Solar Primer. May I link to your article in my blog? It’s not commercial, and it’s in a very small area with very little readership YET! But I think providing links to an article like this would be a real plus. We might not be economically suited to buy hybrids in this country, but we are very suitable and interested in solar and other energy, and your post is a great example of how people should be thinking to get the most out of their infrastructure (homes, cars, etc.) Cordially, Kathy
Environmental News Bits»Blog Archive » Major Green Tax Deductions
posted on February 17th, 2010 at 9:47 am
[...] Read the full post at Earth911. Ah, tax season. The time of year where no accomplishment is unworthy of mention if it equals a write-off. [...]
Triskelion
posted on February 19th, 2010 at 3:34 pm
I use CFL’s but they do contain mercury though.
Read up on the health and environmental issues towards the bottom.
http://en.wikipedia.org/wiki/Compact_fluorescent_lamp
Maybe they will make htem less hazardous one of these days.
Green Tax Deductions « UVa GreenLib Community
posted on February 20th, 2010 at 2:32 pm
[...] choices. Courtesy of earth911.com. See the full article with details on all of these tax deductions here. Posted by Brian Filed in tax credit, transportation Leave a Comment [...]
Debby
posted on February 21st, 2010 at 5:04 pm
I know that the Salvation Army in my area of NE penna. does not accept electronic items as donations. Some items not eligible for donation are microwaves, tv,s, monitors, pc’s, keyboards,etc. All other donations are greatly appriciated.
laura Rodriguez
posted on March 2nd, 2010 at 5:39 pm
Good tips Trey, and don’t forget going whole house solar. My husband and I went solar, got a used electric car(t) for around town, and updated our Prius to a 2010. We ended up getting back more than was taken out of our paychecks! (and the Gov. still owes us more for a few more years!) Our commitment to go green is even greener than we thought.
david
posted on March 11th, 2010 at 10:01 am
I’m starting a recycle collection business here in Woodbury Tn.
$10 monthly pick up.
I will need to go to Murfreesboro to recycle what I collect.
Any suggestions on this project would be welcome.
Can I apply for a grant?
David Tombs
tombsdavid@yahoo.com
Matt
posted on November 8th, 2010 at 12:18 pm
I’m looking for some information about recycling equipment as tax deductible. I work for an office that consumes tons (literally) of paper and plastics and I’m having trouble pushing through the red tape to get something done. Are purchases like recycling containers tax deductible? We’ll also probably need a large outdoor storage container to store the material in between pick-ups. If you can point me to some specific IRS code that would be very helpful also!
Thanks!