Federal Tax Incentives for Renewable Energy and Energy Efficiency
For questions, contact Angela Wolfe.
Energy, Treasury Now Accepting Applications for Funding For Renewable Energy Projects [Read More]
ADVANCED ENERGY INVESTMENT CREDITS
U.S. Senate Summary: The proposal establishes a new 30% investment tax credit for facilities engaged in the manufacture of advanced energy property. Credits are available only for projects certified by the Secretary of Treasury, in consultation with the Secretary of Energy, through a competitive bidding process.
Estimated Cost: $1.647 billion over 10 years
NEW MARKETS TAX CREDITS
U.S. Senate Summary: Under current law, there are $3.5 billion of New Markets Tax Credits (NMTC) available for each of 2008 and 2009. The provision increases the available credits for 2008 to $5 billion and the available credits for 2009 to $5 billion.
Estimated Cost: $815 million over 10 years
RENEWABLE ENERGY PRODUCTION TAX CREDITS
U.S. Senate Summary: The bill would extend the placed-in-service date for wind facilities for three years (through December 31, 2012). The bill would also extend the placed-in-service date for three years (through December 31, 2013) for certain other qualifying facilities: closed-loop biomass; open-loop biomass; geothermal; small irrigation; hydropower; landfill gas; waste-to-energy; and marine renewable facilities.
Estimated Cost: $13.143 billion over 10 years
TEMPORARY ELECTION TO CLAIM THE INVESTMENT TAX CREDIT IN LIEU OF THE PRODUCTION TAX CREDIT
U.S. Senate Summary: Under current law, facilities that produce electricity from solar facilities are eligible to take a thirty percent (30%) investment tax credit in the year that the facility is placed in service. Facilities that produce electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, waste-to-energy, and marine renewable facilities are eligible for a production tax credit. The production tax credit is payable over a ten-year period. The bill would allow facilities to elect to claim the investment tax credit in lieu of the production tax credit. Estimated Cost: $285 million over 10 years
REMOVAL OF DOLLAR LIMITATIONS ON CERTAIN ENERGY CREDITS
U.S. Senate Summary: Under current law, businesses are allowed to claim a thirty percent (30%) tax credit for qualified small wind energy property (capped at $4,000). Individuals are allowed to claim a thirty percent (30%) tax credit for qualified solar water heating property (capped at $2,000), qualified small wind energy property (capped at $500 per kilowatt of capacity, up to $4,000), and qualified geothermal heat pumps (capped at $2,000). The bill would repeal the individual dollar caps. As a result, each of these properties would be eligible for an uncapped thirty percent (30%) credit.
REPEAL OF THE SUBSIDIZED ENERGY FINANCING LIMITATION ON THE INVESTMENT TAX CREDIT
U.S. Senate Summary: Under current law, the investment tax credit must be reduced if the property qualifying for the investment tax credit is also financed with industrial development bonds or through any other Federal, State, or local subsidized financing program. The bill would repeal this subsidized energy financing limitation on the investment tax credit in order to allow businesses and individuals to qualify for the full amount of the investment tax credit even if such property is financed with industrial development bonds or through any other subsidized energy financing.
Estimated Cost: $872 million over 10 years
CLEAN RENEWABLE ENERGY BONDS
U.S. Senate Summary: The bill authorizes an additional $1.6 billion of new clean renewable energy bonds to finance facilities that generate electricity from the following resources: wind; closed-loop biomass; open-loop biomass; geothermal; small irrigation; hydropower; landfill gas; marine renewable; and trash combustion facilities. This $1.6 billion authorization will be subdivided into thirds: 1/3 will be available for qualifying projects of State/local/tribal governments; 1/3 for qualifying projects of public power providers; and 1/3 for qualifying projects of electric cooperatives.
Estimated Cost: $578 million over 10 years
QUALIFIED ENERGY CONSERVATION BONDS
U.S. Senate Summary: The bill authorizes an addition $2.4 billion of qualified energy conservation bonds to finance State, municipal and tribal government programs and initiatives designed to reduce greenhouse gas emissions. The bill would also clarify that qualified energy conservation bonds may be issued to make loans and grants for capital expenditures to implement green community programs. The bill also clarifies that qualified energy conservation bonds may be used for programs in which utilities provide ratepayers with energy-efficient property and recoup the costs of that property over an extended period of time.
Estimated Cost: $803 million over 10 years
ENERGY-EFFICIENT IMPROVEMENT TAX CREDITS FOR EXISTING HOMES
U.S. Senate Summary: The bill would extend the tax credits for improvements to energy-efficient existing homes through 2010. For 2009 and 2010, the bill would increase the amount of the tax credit to thirty percent (30%) of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements during the taxable year. The bill would also eliminate the property-by-property dollar caps on this tax credit and provide an aggregate $1,500 cap on all property qualifying for the credit.
Estimated Cost: $2.034 billion over 10 years
ALTERNATIVE REFUELING PROPERTY TAX CREDITS
U.S. Senate Summary: The alternative refueling property credit provides a tax credit to businesses (e.g., gas stations) that install alternative fuel pumps, such as fuel pumps that dispense E85 fuel, electricity, hydrogen, and natural gas. For 2009 and 2010, the bill would increase the 30% alternative refueling property credit for businesses (capped at $30,000) to 50% (capped at $50,000). Hydrogen refueling pumps would remain at a 30% credit percentage; however, the cap for hydrogen refueling pumps will be increased to $200,000. In addition, the bill would increase the 30% alternative refueling property credit for individuals (capped at $1,000) to 50% (capped at $2,000).
Estimated Cost: $54 million over 10 years
PLUG-IN ELECTRIC DRIVE VEHICLE CREDITS
U.S. Senate Summary The bill modifies and increases a tax credit passed into law at the end of last Congress for each qualified plug-in electric drive vehicle placed in service during the taxable year. The credit is allowed against the alternative minimum tax (AMT). The bill also restores and updates the electric vehicle credit for plug-in electric vehicles that would not otherwise qualify for the larger plug-in electric drive vehicle credit and provides a tax credit for plug-in electric drive conversion kits.
Estimated Cost: $2.002 billion over 10 years
TRANSIT BENEFITS
U.S. Senate Summary: Current law provides a tax-free fringe benefit employers can provide to employees for transit and parking. Those benefits are set at different dollar amounts. This provision would equalize the tax-free benefit employers can provide for transit and parking. The proposal sets both the parking and transit benefits at $230 a month for 2009, indexes them equally for 2010, and clarifies that certain transit benefits apply to federal employees.
Estimated Cost: $192 million over 10 years
ENERGY GRANTS IN LIEU OF TAX CREDITS
U.S. Senate Summary: Under current law, taxpayers are allowed to claim a production tax credit for electricity produced by certain renewable energy facilities and an investment tax credit for certain renewable energy property. These tax credits help attract private capital to invest in renewable energy projects. Current economic conditions have severely undermined the effectiveness of these tax credits. As a result, the bill would allow taxpayers to receive a grant from the Treasury Department in lieu of tax credits. This grant will operate like the current-law investment tax credit. The Treasury Department will issue a grant in an amount equal to thirty percent (30%) of the cost of the renewable energy facility within sixty days of the facility being placed in service or, if later, within sixty days of receiving an application for such grant.
Estimated Cost: $5 million over 10 years
Additional Federal Links
Department of Energy’s Consumer Energy Tax Incentives Page
Department of Energy’s Businesses, Utilities, and Government Tax Incentives Page
Department of Energy’s Tax Incentives Page
Energy Star Federal Tax Credits for Energy Efficiency Page
Tax Incentives Assistance Project
Iowa Tax Incentives for Renewable Energy and Energy Efficiency
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