At the federal level, corporations and individuals are eligiblefor credits and deductions for engaging in certain activities. Forbusinesses, here are some of the potential tax benefitsavailable:

  • Commercial building owners may be eligible for deductionsrelating to installation of interior lighting; certain roofing andinsulation; or heating, cooling, ventilation or hot water systemsas part of a plan to reduce the total annual energy and powercosts, as long as the systems meet certain minimum standards.
  • Builders producing energy efficient homes may be eligible for acredit of $1,000 to $2,000 per home, depending on the level ofenergy savings and the type of home.
  • Manufacturers who produce energy efficient appliances (e.g.,washing machines, refrigerators and dishwashers) are eligible for atax credit to a whopping maximum of $75 million. The credit iscalculated based on the number of appliances produced and the levelof efficiency compared to a baseline amount.
  • Finally, corporations producing and selling renewableelectricity through the use of qualified energy resources such assolar energy, wind and hydropower production may be eligible for acredit based on the number of kilowatts produced.
  • Virtually every state has a set of incentives that are similarto the federal rules. A few examples:

  • New York offers a corporate tax credit for owners and tenantswho maintain buildings and tenant spaces that meet certain "green"standards. The credit is allowable to a maximum of $2 million perbuilding, and is distributed over a period of five years.
  • New Jersey focuses primarily on incentives for business,including a homebuilder's credit for Energy Star appliancespurchased in connection with homebuilding, a sales tax exemptionfor acquired solar and wind energy equipment and several othersimilar rebates and loans.
  • California has a number of incentives available at both thestate and municipal level, ranging from direct investment creditsto utility rebates, loans and grants.

Many benefits are available to taxpayers from the federalgovernment and various states in the form of tax reductions,credits and incentives. These encompass individual benefits andbenefits to business.

Some of the credits available to individuals include thefollowing:

  • Individuals may be eligible to receive a credit up to $500 forreplacing certain building components on their existing residence,including roofing, exterior windows and insulation.
  • New and improved hybrid car incentives offer a direct creditranging from $650 to $3,150 depending on the type of carpurchased.
  • Individuals who spend money on qualified solar electricproperty, solar water heating property and qualified fuel cellproperty may be eligible for 30% direct credit against their incometax to a maximum of $2,000.
  • Finally, energy-efficient mortgages can be used to finance avariety of energy saving measures, including renewable energytechnologies, in a new or existing home.

The savings involved in these provisions can be substantial, andprovide an added incentive for taxpayers to do the right thing forthe environment. Note that some of these credits do not reduce thealternative minimum tax, so taxpayers need to be careful not to getwhipsawed in the process of trying to save a tax buck.

Elizabeth Gillon is managing director of tax servicesfor Smart Business Advisory and Consulting, based in the firm's NewYork City office.

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