Hopefully, your e-filed taxes are bearing fruit this week (woot! direct deposit refund). For my part, I was surprised by the parsimoniousness for energy efficiency.
How is the tax code aligning with the lofty ambitions of moving the U.S. away from its dependency on fossil fuels? As you might suspect, there’s room for growth.
Federal tax incentives for energy efficiency
Congress got more tightfisted in its promise to help Americans who shelled out to make their homes more energy efficient with insulation and air sealing last year. The tax break was capped at $500 instead of the $1,500 Congress offered in 2009 when it made a big push for energy efficiency in the Recovery Act. Worse still, the $500 cap covers the last three years.
I just hung up with our tax preparer who informed me the $2,000 we invested in 2012 insulating and air sealing our attic and basement will get ZERO in tax credits from the IRS. We might have expected $500 if we hadn’t claimed a $500 credit in 2011 from installing two new windows in our nursery and a hot water heater in the basement.
The ignominy of no rebate from the gas company and no tax credit for the insulation work is now complete. It confirms, there may be "oilfields in our attic", as Amory Lovins famously said, but don’t expect to become a sheik from that operation. The one bright spot is a warmer, more comfortable living space. With natural gas prices reportedly dropping (although there’s scant evidence in our bills), it suggests even longer waits for a payback on home energy efficiency investments.
Federal tax breaks for renewable energy
The IRS offers a tax credit of 30% of the total installation of renewable energy systems including solar electric and solar hot water, wind turbines, geothermal and fuel cells.
State incentives for energy efficiency
Ohio has no tax incentives for energy efficiency on homes or business.
A quick search of the U.S. Department of Energy site for our neighboring Midwestern states reveals that
- Michigan, Indiana and Pennsylvania also have no state tax breaks for energy efficiency
- Illinois: The Energy Impact Illinois program offers a rebate of 70% of project costs up to $1,750 for implementing energy efficient measures.
- New York provides a 50% grant up to $5,000 for lower income homeowners. Also, its EmPower NY program provides EE grants for multi-family and income qualifying.
Like many states, Ohio offers a loan for energy efficiency work. EcoLink promises a 3% reduction in interest rates for insulation, air sealing, and new more efficient appliances. If you qualify (or can afford) a loan, and can stomach the paperwork and added layer of bureaucracy of a state agency, this may be an option for you.
On a home equity loan, another option is the Cleveland Restoration Society’s Home Heritage Loan program. CRS is advertising 1.4% for Cleveland and 2% interest for Cuyahoga County residents. If you’re renovating a bathroom, for example, the insulation, windows, and energy and water efficient appliances and fixtures may qualify.
State tax incentives or rebates for renewable energy
Green Energy Ohio is offering a 20% rebate on solar hot water units installed on homes—but the program ends at the end of March, 2013. Check out their web site for details.
In short, you select an approved vendor and they can reduce your cost for solar thermal by as much as $2,400. After March, any remaining funds in the program will be shifted to commercial installations.
As mentioned, Dominion qualifies for the state's energy efficiency mandate through its GoodCents program. It starts with a subsidized ($50) energy audit. As my experience with GoodCents revealed, the rebates for insulation and air sealing are directly tied to the performance of your furnace. If the furnace is not operating like new, your rebates are held hostage until it can or you replace it.
The Cleveland Energy $avers program offers 20% discounts up to $2,500 and low interest loans for Cleveland residents who do energy efficiency improvements. The program ends when it runs out of money.