Taxation

Get Your Hands on Energy Stimulus Funds

Congress passed the American Recovery and Reinvestment Act of 2009 (also known as the "Stimulus Act") to pump $787 billion back into the nation's failing economy. A chunk of that money, $16.8 billion, was allotted to the US Department of Energy (DOE) to increase energy efficiency and decrease dependence on foreign oil. Several energy programs put that money within the reach of household consumers.

Stimulus Funds to Weatherize Homes

The DOE doled out $5 billion to states through its Weatherization Assistance Program to make homes more energy efficient. Working through state and local agencies, the program provides low-income families with free home repairs and upgrades to reduce heating and cooling costs.

On average, the weatherization services save a family $350 in energy bills per year. The DOE estimates that about 20 to 30 million families are eligible for the weatherization services nationwide, and its goal is to provide services to a million households each year.

How Weatherization Works

An average of $6,500 can be spent to weatherize each home under the program. First a computerized energy audit is done to determine the measures that will be most cost-effective. Then trained weatherization crews install energy-saving measures. These measures may include:

  • Adding insulation to walls, floors and attics
  • Sealing air leaks by putting caulking and weather-stripping around doors and windows
  • Cleaning, repairing or replacing heating and cooling units
  • Upgrading heating and cooling units by adding a setback thermostat
  • Sealing heating and cooling air ducts
  • Adding insulation to water heater tanks and pipes
  • Installing circulating fans, ceiling fans or attic fans

Are You Eligible?

Each state sets its own program requirements. In most states you're eligible for weatherization assistance if your household income is at or below 200% of the poverty level ($29,140 for a family of two; $44,100 for a family of four, for example). If you receive Supplemental Security Income or Aid to Families with Dependent Children, you automatically qualify for the weatherization program. Some states give priority to people over age 60, people who are disabled and families with children.

Contact your state administrator for information on how to qualify and apply for weatherization assistance in your area.

Stimulus Act Energy Tax Credits

The Stimulus Act also extended many federal tax incentives to promote renewable energy and energy efficiency. Some of these tax credits include:

  • Home Energy Efficiency Improvement Tax Credits: Consumers who purchase and install energy-efficient windows, insulation, doors, roofs and heating and cooling equipment can receive a tax credit for 30% of the cost, up to $1,500, for improvements made during 2009 and 2010
  • Residential Renewable Energy Tax Credits: Consumers who install solar energy systems (including solar water heating and solar electric systems), small wind systems, geothermal heat pumps, and residential fuel cell and micro-turbine systems can receive a 30% tax credit for systems put in service before December 31, 2016
  • Hybrid Vehicles Tax Credits: Individuals and businesses who buy or lease a new hybrid gas-electric car or truck are eligible for an income tax credit for vehicles put in service starting January 1, 2006, and purchased on or before December 31, 2010
  • Alternative-Fuel Vehicle Tax Credits: Diesel vehicles with advanced lean-burn technologies and fuel-cell vehicles are also eligible for tax credits
  • Plug-In Electric Vehicles: Plug-in electric vehicles qualify for a tax credit ranging from $2,500 to $7,500, starting January 1, 2010
  • Plug-In Hybrid Conversion Kits: Hybrid vehicle owners who purchase a qualified plug-in hybrid conversion kit are eligible for a 10% credit, up to $4,000, through 2011

See EnergyStar.gov for a listing of energy efficiency tax credits for consumers. Go to IRS.gov for a summary of the tax-related provisions of the Stimulus Act.

You may also quality for state rebates or state tax incentives for energy-efficient home improvements and vehicles. See DSIRE for state, local, utility company and federal energy-related incentives.

Take advantage of these stimulus energy saving programs to stimulate the economy, help the environment and put money in your own pocket.

Questions for Your Attorney

  • I think there are a few stimulus programs that I can take advantage of as an individual. Should I do some advance tax planning? Does my personal tax situation make a difference? Do I need to stagger these incentives out over a couple of tax years?
  • Can I use the energy-related tax credits on a new home construction project or just for improvements to an existing home?
  • I'm planning on selling my current home and buying another one - can I claim the various home-improvement credits for both homes, say for improvements before I sell, and the same once I find a new place? Can you help with the paperwork for these stimulus incentives along with representing me in the real estate transactions?
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