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Energize Your Tax Planning

Federal energy credits of up to $40,000 in savings, as well as state credits in many states are available.

Federal energy credits designed to help stimulate business growth are available to you. Many businesses and individuals throughout the nation are focused on greening their business operations and residences. However, the cost of adopting many of these technologies can be prohibitively expensive -- unless taxpayers factor in state and federal energy credits.

Contact The Tax Credit Specialist to claim your savings.

For example – many solar applications can have a payback period of 10 years or more. The 30% IRS energy tax credit for solar investments, combined with many state-level energy tax credits, can significantly shorten the payback period. Another significant example involves the incremental costs of a clean-burning big-rig truck which can be $100,000 or more over a gasoline-powered version. These significant incremental costs can be partially offset with federal credits of up to $40,000 in federal, as well as state credits in many states.

These state and federal energy tax credits typically range from 5% to 50% of the qualified equipment costs. The typical federal energy tax credit falls within a 30% to 50% range, which can dramatically reduce the payback period for these environmentally beneficial capital investments. State energy credits have an even wider range which can be as high as 100% of the cost of the equipment for certain types of investments.

IRS energy tax credit programs include a wide range of qualified investments which can generate valuable incentive tax credits. Examples of federal energy tax credits include:

  • Hybrid Vehicle Credits, Electric Plug-In Vehicle Credits, Lean-Burn and Fuel-Cell Vehicle Tax Credits. These credits range from $500 for certain passenger vehicles to as much as $40,000 for hi-tech big-rig trucks,
  • Alternative Refueling Stations such as plug-in electric and liquid nitrogen gas (LNG) recharging stations (up to 50% energy credit/ $50,000 per station),
  • Hydrogen Refueling Stations (up to 30% federal energy credit/ $200,000 per station),
  • Alternative Fuel Production Credits – a federal energy tax credit of 10 cents per gallon to $1.01 per gallon for the production of alcohol, ethanol, and
  • bio-diesel blended fuels encourage conversion to alternative fuels,
  • Bio-mass energy tax credits for investment in equipment which can convert bio-degradable feedstock into energy,
  • Qualified Energy Property – a 30% IRS energy tax credit is available for investment in a broad range of solar, geothermal, wind and other renewable equipment

The state level energy tax credits vary on a state-by-state basis, but can range from 10%to 100% of the qualified expenditures.. Some states offer income tax credits, while others offer sales tax exemptions, subsidies -- or a combination thereof.

While the vast majority of states offer some form of eco-tax incentives, states with more robust energy tax credits and pollution control incentives include: New York, California, Illinois, Florida, Kentucky, and Oregon.

With the increasing attention to climate change, carbon footprint reduction and increasing use of alternative energy sources, taxpayers can anticipate additional federal and state legislative action with respect to expanding energy tax credits and other eco-incentives.

Additional articles and resources related to federal and state energy credits and other financial incentives can be accessed at:

Blake Christian can be contacted at: (562) 216-1800 or blakec@hcvt.com.

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