It’s tax season once again, which means it’s time for taxpayers to learn which tax credits they may qualify for this year. Taxpayers who made an effort to live a greener lifestyle may benefit from several different energy efficiency tax credits. Here’s what you need to know about the energy tax credit for 2019 tax returns:
Is There A Residential Energy Tax Credit For 2019?
Homeowners who made energy-efficient upgrades may qualify for these federal tax credits:
- Nonbusiness Energy Property Tax Credit
- Residential Renewable Energy Tax Credit
Nonbusiness Energy Property Tax Credit
The Nonbusiness Energy Property Tax Credit expired at the end of 2017, but it was retroactively extended through 2020. This tax credit is equal to 10% of the cost of qualified home energy efficiency upgrades and 100% of residential energy property costs.
Examples of qualified home energy efficiency upgrades include:
- ENERGY STAR® doors, windows, and skylights
- Roofing materials, including cooling granules and pigmented coatings
Examples of residential energy property costs include:
- ENERGY STAR® heat pumps
- ENERGY STAR® air conditioners
- ENERGY STAR® gas-powered boilers
- ENERGY STAR® water heaters
- Biomass stoves
This credit is capped at $500 for all tax years combined. For example, if you claimed $250 under this credit last year, you can only claim $250 this year.
There are several other rules that must be followed when claiming this credit. For example, you cannot claim more than $200 for the cost of energy-efficient windows or more than $150 for the cost of an energy-efficient furnace or boiler.
Residential Renewable Energy Tax Credit
Homeowners who installed certain types of renewable energy equipment in their homes may qualify for this tax credit. Some examples of the equipment that qualifies for this credit include:
- Solar panels
- Solar-powered water heater
- Wind turbines
- Geothermal heat pumps
- Fuel cells that use renewable sources of energy to power a home
This tax credit is equal to 30% of the cost of purchasing and installing this equipment. There is no cap on this tax credit for solar, wind, or geothermal energy equipment. However, the cap for fuel cell equipment is $1,000 per kilowatt.
You can claim this credit for any solar, wind, or geothermal equipment installed at your main or secondary home. However, the credit is only available for fuel cell technology installed at your main residence.
Is There A Tax Credit For Energy Efficient Vehicles?
You may qualify for an energy tax credit even if you didn’t make energy-efficient upgrades in your home. If you recently purchased an energy-efficient vehicle, you may qualify for one of these tax credits:
- Qualified Plug-In Electric Drive Motor Vehicle Tax Credit
- Alternative Motor Vehicle Tax Credit
Qualified Plug-In Electric Drive Motor Vehicle Tax Credit
If you purchased a new plug-in electric vehicle, you may be eligible for this tax credit. All plug-in electric vehicles are not covered by this tax credit. To qualify, your vehicle must be on the official list released by the Internal Revenue Service (IRS) every year. Some of the vehicles that are included for the 2019 tax year include:
- 2017-2019 Chevrolet Bolt
- 2011-2019 Chevrolet Volt
- 2012-2018 Ford Focus Electric
- 2014-2020 BMW i3 Sedan
- 2018-2019 Honda Clarity Plug-In Hybrid
- 2015-2019 Kia Soul Electric
- 2011-2019 Nissan Leaf
The exact value of this tax credit will vary depending on the year, make, and model of your vehicle. But in general, this tax credit is worth between $2,500 to $7,500.
Alternative Motor Vehicle Tax Credit
If you purchased a new qualified fuel cell vehicle before 2017, you may qualify for this tax credit. Some examples of the vehicles that qualify for this tax credit include:
- 2012 Mercedes Benz F-Cell
- 2008-2012 Honda FCX Clarity Fuel Cell Vehicle
The value of this tax credit will vary depending on the year the vehicle was purchased, made, and model. It can range anywhere from $4,000 to $8,000.
How Does the Energy Tax Credit Work?
A tax credit helps taxpayers reduce the amount of taxes they owe to the government. Every tax credit that you claim will further reduce the taxes you owe.
For example, say you owe $3,000 in taxes, but qualify for $2,500 in energy tax credits. Claiming these credits will reduce the amount of taxes you owe to $500.
It’s in your best interest to claim as many tax credits as possible so you can lower your tax bill.
Save Money With Energy Tax Credits in 2020
The opportunity to claim an energy tax credit is one of the many benefits of living a greener lifestyle. This tax season, make sure you don’t file your taxes until you find out if you qualify for one or more of these energy tax credits.