As we become more aware of the impact that human activity has on our environment, many people are looking for ways to reduce their carbon footprint and lessen their impact on the planet.
Did you knowthe United States government offers tax credits for environment-related activities that can help normal citizens make a positive impact while also saving money?
Here are some of the most popular environment-related tax credits that normal citizens can take advantage of:
1. Residential Clean Energy Tax Credit
The Residential Clean Energy Tax Credit is one of the most significant tax credits available to homeowners who want to install renewable energy systems in their homes.
The tax credit is available until December 31, 2023, and offers a 30% credit for the cost of installation for solar panels, wind turbines, geothermal heat pumps, or fuel cells in their primary residence.
The Residential Renewable Energy Tax Credit is a great way for homeowners to reduce their reliance on fossil fuels and generate their own clean energy.
It can also help offset the cost of installing renewable energy systems, which can be a significant expense. It’s important to note that there are certain eligibility requirements, such as the equipment must be new and the homeowner must own the property.
Starting in 2033, the credit percentage rate phases down to 26% for 2033, then to 22% for 2034, and finally to no credit being available after December 31, 2034.
2. Electric Vehicle Tax Credit
Another popular tax credit is the Electric Vehicle Tax Credit, which applies to individuals who purchase a qualifying electric vehicle (EV) with a battery capacity of at least 5 kilowatt-hours. The credit varies depending on the make and model of the EV but can be as high as $7,500. This credit is available until the manufacturer has sold a total of 200,000 qualifying vehicles in the US.
While this credit is not specifically designed for low-income families, there are several affordable EV models available on the market that may be eligible for the credit.
The Electric Vehicle Tax Credit is designed to encourage more people to purchase EVs, which emit fewer greenhouse gases than traditional gas-powered vehicles. In addition to the tax credit, many states offer additional incentives, such as HOV lane access and free charging station access.
3. Energy-Efficient Home Improvement Tax Credit
The Energy-Efficient Home Improvement Tax Credit is available to homeowners who make certain energy-efficient improvements to their homes, such as insulation, energy-efficient windows, or a high-efficiency furnace or air conditioner.
The tax credit is for up to $1,200 per year and it applies to improvements made to the taxpayer’s principal residence between January 1, 2023 and December 31, 2032. The credit is equal to the lesser of 30% of the sum of amounts paid for qualifying home improvements or the annual $1,200 credit limit.
The Energy-Efficient Home Improvement Tax Credit is an excellent way for homeowners to save money while also reducing their energy consumption.
Because the tax credit has an annual limit, you could spread out qualifying home improvements over 10 years and receive up to $12,000 back on your taxes.
In addition to the $1,200 credit, a separate yearly credit limit of $2,000 applies to qualified investments in heat pumps and biomass stoves and boilers. This means you can claim a maximum total yearly energy efficient home improvement credit amount up to $3,200.
These improvements can help reduce heating and cooling costs and increase the overall energy efficiency of the home.
Prior to its extension, this credit was known as the Nonbusiness Energy Property Credit.
4. Energy-Efficient Appliance Tax Credit
The Energy-Efficient Appliance Tax Credit is available to taxpayers who purchase certain energy-efficient appliances, such as refrigerators, dishwashers, and washing machines.
The amount of the credit varies depending on the appliance and can be up to $500. This credit is available until December 31, 2021.
The Energy-Efficient Appliance Tax Credit is designed to encourage the purchase of energy-efficient appliances, which can help reduce energy consumption and lower energy bills.
These appliances typically use less water and electricity than traditional appliances, which makes them a great investment for homeowners. It’s important to note that not all appliances are eligible for the credit, and the credit is subject to a lifetime cap of $500.
5. Residential Energy Efficiency Property Credit
This credit is available to homeowners who install qualified residential energy efficiency equipment, such as solar panels or solar water heaters, in their primary residence.
The credit is worth up to 26% of the cost of the equipment, up to a maximum credit of $1,680 for solar water heaters or $4,200 for solar panels. This credit is available until December 31, 2023.
Reduce Your Carbon Footprint & Save Money
As you can see, there are several environment-related tax credits that normal citizens can take advantage of to reduce their carbon footprint and save money. Whether you’re interested in installing solar panels, purchasing an electric vehicle, or making energy-efficient home improvements, there are tax credits available that can help offset the cost.
It is important to note that tax laws are subject to change, and eligibility for these credits may vary depending on your specific circumstances. It is always a good idea to consult a tax professional before claiming any tax credit.