Save Energy and Save Taxes

Last updated on March 11, 2014

If you use energy efficient equipment, including vehicles, you can lower your tax liability by taking advantage of tax credits for saving energy. The Residential Energy Efficiency Tax Credit was extended to December 31^st, 2013. If you haven’t yet filed your tax return, you may use this tax credit of up to $500 for the years 2011, 2012 and 2013. If you have claimed this tax credit in any of these previous years, then you cannot use it again this year.

Any energy efficiency improvements in your residential building such as the purchase of high-efficiency heating, cooling and water-heating equipments are eligible for this tax credit. You can claim this credit only if the residential building is your primary residence.

If you own an alternative-energy vehicle, you may be able to claim a federal tax credit of up to $4,000 if you purchased a qualified alternative fuel vehicle (AFV) between January 1^st, 2005 and December 31^st, 2010. AFVs purchased after December 31^st, 2010 are not eligible for this tax credit.

Using tax credits for saving energy can reduce your tax bill if your equipment or vehicle qualifies the eligibility criteria. Before claiming a credit, ensure that you have checked all the qualifying factors.