Lower Energy Bills and Federal Taxes

Washington, D.C. - infoZine - The Tax Incentives Assistance Project (TIAP) urges home builders, commercial builders, and commercial building owners to lower their energy costs and their federal tax liability by constructing highly-efficient properties. Federal tax incentives also are available to commercial building tenants who make energy-saving improvements to existing buildings; to manufacturers of high-efficiency refrigerators, clothes washers, and dishwashers produced in 2007 and 2008; and to business purchasers of hybrid vehicles. Full details are spelled out on the TIAP website, www.energytaxincentives.org.

Through tax year 2008, owners or tenants can receive a federal tax deduction of up to $1.80 a square foot for cutting by at least half the annual heating, cooling, ventilation, water heating, and interior lighting costs of new or renovated buildings that meet the national ASHRAE Standard 90.1-2001. (Only buildings covered by the scope of that ASHRAE standard are eligible.) For government properties, building designers can claim the tax deduction.

Lesser deductions, of $.60 per square foot, are available for less sweeping energy-efficiency measures - specifically for improvements to only one of three building systems - the building envelope, the lighting system, or heating and cooling system. To claim that deduction, the owner or tenant must reduce total heating, cooling, ventilation, water heating or interior lighting energy use by 16.66 percent (that percentage being one-third of the higher 50 percent goal). If the owner or tenant makes energy-efficiency improvements of 16.66 percent to two of the three systems, an $.80 per square foot tax deduction is available.

Also available through December 2008 are federal tax credits for builders of site-built or manufactured homes. Such homes would be projected to save at least half of the heating and cooling energy of a comparable home that meets the standards of the 2003 International Energy Conservation Code (including supplements). A $2,000 credit is available for each qualifying home in the year it is sold.

Site-built homes must be certified to use at least 50 percent less energy than a comparable home that complies with the standards provided in the 2003 IECC (including supplements) and uses a SEER 13 air conditioner. Builders of manufactured homes that are certified to save 30 percent, or that qualify for the Environmental Protection Agency's ENERGY STAR Homes program, can receive a tax credit of $1,000 per home.

Qualifying homes feature a range of innovative design and construction methods that increase energy efficiency, such as better-insulated foundations, walls, and ceilings; high-efficiency windows; well-sealed framing and air ducts; and high-efficiency heating and cooling systems.

For appliance manufacturers, the tax credits are as follows:

• Clothes washers: $100 for models that meet the 2007 ENERGY STAR criteria.
  
• Refrigerators:
  
  • $75 for models that save at least 15 percent relative to 2001 federal standards - the same as the current ENERGY STAR criteria. (This credit is available only for tax year 2006.
    
  • $125 for models that save at least 20 percent relative to 2001 federal standards.
    
  • $175 for models that save 25 percent or more relative to 2001 federal standards.
  
  
• Dishwashers: Models must meet the 2007 ENERGY STAR criteria - Energy Factor (EF) 0.65 for standard-sized dishwashers - so manufacturers can receive a tax credit of $32.31 per unit. The standard for compact dishwashers is EF 0.88.

Through December 31, 2010, buyers and lessees of hybrid vehicles can receive federal tax credits. Credits are based on a complex formula determined by vehicle weight, technology, and fuel economy compared to base year models.

"Energy-efficiency tax incentives offer consumers, businesses and manufacturers a unique opportunity to pay 'Uncle Sam' less in taxes while at the same time helping to ensure a sustainable energy future for our nation," said Kateri Callahan, president of the Alliance to Save Energy, a TIAP founding member.

Bill Prindle, acting executive director of the American Council for an Energy-Efficient Economy (ACEEE), also a TIAP founder, commented, "Now is the time to act on energy-efficiency investments. These federal tax incentives will help businesses save money while cutting carbon emissions to stabilize our climate."

TIAP members ACEEE, the Alliance, and the Natural Resources Defense Council are working closely with members of Congress to extend the tax incentives beyond their current expiration dates to provide sufficient time to bring about real market transformation and make energy-efficient buildings, appliances, and vehicles the norm.