Not surprisingly, most reports on the bailout act have focused on whether it's the right medicine to help U.S. financial institutions and how much it's going to cost taxpayers. But the act also includes some residential energy credits that may make it more appealing for you or your clients to convert to solar power, buy an electric car or ride a bike to work.
Among other things, the act extends for eight years the 30% tax credit for both residential and commercial solar installations and eliminates the $2,000 cap for residential solar electric installations, meaning homeowners can get a true 30% credit for the cost.
"This long-term extension of the solar tax credits will create a domestic solar industry with hundreds of thousands of jobs while providing clean, affordable, carbon-free energy to millions of American families, businesses and communities," says Rhone Resch, president of the Solar Energy Industries Association.
Jack Robinson, president of Winslow Management Co. and portfolio manager of the Winslow Green Growth Fund, says that the new federal energy tax credits, combined with some state programs, might cover 50% of the entire cost of installing solar panels in a home. Robinson made the comment during a press conference Thursday sponsored by the Social Investment Forum on clean energy and green technology. He and others at the event say government policy has become increasingly favorable toward alternative energy and they expect that to continue, no matter who wins the U.S. presidential election in less than three weeks.
Forefield Inc., www.forefield.com, a research provider for financial advisors, notes the new law, The Emergency Economic Stabilization Act of 2008, also allows wind energy equipment and geothermal heat pumps to qualify for the 30% credit. However, the credit for wind energy equipment is capped at $4,000 and geothermal pumps are capped at $2,000.
Forefield says other provisions in the act include:
An extension through 2009 of the residential energy conservation property credit, which can be up to $500 for purchasing energy-saving products, such as windows, insulation and HVAC systems. Two new types of improvements qualify for the credit: biomass fuel stoves with a thermal efficiency rating of 75% or more and asphalt roofs with cooling granules. The act also clarifies that water heaters must have either an energy factor of at least 0.80 or a thermal efficiency rating of at least 90% to qualify for the credit. While the credit is worth up to $500 for various improvements, the credit is limited to $200 for windows and to $300 for biomass fuel stoves.
Creation of a tax credit of $2,500 to $7,500 for plug-in electric vehicles. The credit will start to phase out after 250,000 qualifying electric vehicles are sold. Vehicles that qualify will need to be certified under the Clean Air Act and meet the California low-emission standards. Higher tax credits are also available for electric vehicles with gross vehicle weight ratings of more than 10,000 pounds.
Creation of tax-free fringe benefits for bicyclists. The act provides a new tax break for people who commute by bicycle. Employers can provide a tax-free fringe benefit of up to $20 per month to cover "reasonable expenses incurred by the employee" for the purchase, improvement, repair and storage of a bicycle that is regularly used to commute between the employee's home and office. This bicycle fringe benefit will begin in 2009.