By now you've probably heard that there are tax incentives and rebates available for alternative energy or conservation efforts for your home, but some of you might still have a little confusion.
I realized the need for this blog post when I was talking to my friend earlier in the week who just bought a home. The home needs a little work to it, and one of the things he had to buy was a new garage door. What I didn't realize was that he will be able to use a Federal tax incentive on his new insulated garage door! He bought a Clopay door and you can see the information on the incentive on their website. The door is eligible for the incentive as part of the American Recovery and Reinvestment act of 2009 because it is insulated, and helps your building envelope!
Basically, there are three main types of incentives (in order of increasing awesomeness):
In regards to a Deduction vs. a Credit, I like what the blog Pays to Go Green has to say about this:
A tax credit is a one-for-one dollar reduction in your total tax bill. Think of it as the government literally giving you a credit for a particular amount of money off of your tax bill. A tax deduction on the other hand reduces your taxable income. Once you have all of your deductions taken off of your total income, this amount is then the amount of money you will be taxed against. The difference is a large one in that a tax credit is much more beneficial than a deduction, but both are useful in reducing your tax bill.
What's better than these two is a Rebate. Rebates are basically checks that are given for purchasing efficient appliances. Free Money! These are usually given out by your utility if they have a program (and not all do). Green Savers ( a company in Central Oregon) has some great information on Rebates and Tax Incentives.
Finally,some of the best resources for more information are:
Dept. of Energy: Consumer Energy Tax Incentives
Energy Star: Tax Incentives