Energy Bill Aimed at Smarter Energy Consumption
April 26, 2006
April 25, 2006 — By James and Morris Carey, Associated Press
Have high utility bills have been busting your monthly budget? Now, heating your water and heating and cooling your home are more affordable, thanks to a recently enacted energy bill.
The Energy Policy Act of 2005 offers consumers federal tax credits for purchasing energy-efficient appliances and products. The energy bill was established in part to help the U.S. better manage its energy consumption and incorporates incentives for American consumers to embrace new energy-conscious technologies and products.
Consumers who buy and install specific residential energy-efficient products, such as exterior windows and doors, insulation, heat pumps, furnaces, central air conditioners, water heaters and roofing, can receive a one-time tax credit of up to $500.
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Beginning in tax year 2006, consumers will be able to itemize purchases on their federal income tax form, which will lower the total amount of tax they owe the government. Most of these tax credits will remain in effect through 2007, with potential for renewal beyond this date.
In addition to the federal tax credit, some consumers will also be eligible for utility or state rebates, as well as state tax incentives for energy-efficient homes and equipment. Look at your states energy office Web site for specific state tax information.
Keep in mind that all improvements must be installed in or on the taxpayers principal residence in the United States and the improvements much be made between Jan. 1, 2006, and Dec. 31, 2007. For the purpose of calculating the allowable tax credit, labor costs may be included in the total cost of the energy upgrade. Some restrictions may apply.
The following is a list of products that qualify and the associated tax credit for each item. Entire Story
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