Tax Tip of the Week – New Tax Incentives for Energy Savings

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Light bulbs Several Clients have asked us about the tax incentives for energy savings contained in the economic stimulus law (The American Recovery and Reinvestment Act of 2009). The new law changes may benefit for both individual and business taxpayers. Following is a brief overview.

For individuals: The new law triples the residential energy credit to 30% of qualified expenditures (up from 10%). Furthermore, the lifetime $500 dollar cap is eliminated. It’s been replaced by an overall limit of $1,500 for 2009 and 2010 combined. The changes are effective for energy-saving installations made after 2008 and before 2011.

The enhanced residential energy credit covers a wide range of improvements, including insulation materials; exterior windows (including skylights); exterior doors and central air conditioners.

For businesses: A business building owner may claim a tax deduction equal to $1.80 per square foot of new or existing commercial buildings that meet certain conditions. Alternatively, partial deductions of up to $0.60 per square foot are available for eco-friendly improvements affecting the building envelope, lighting systems or heating and cooling systems.

Under last year’s Emergency Stabilization Act, these business building deductions may be claimed for property placed in service after 2006 and before 2014 if certain conditions are met.

This is only a brief summary of the key rules. But, if you have made improvements to your property you should let your tax preparer know. To determine how you may benefit from these tax law changes either call me at 915-857-8158 or email me at