Green Energy Initiative Incentives
Climate change has become one of the major challenges of our time. And in an effort to address the urgency and effects of the issue, the federal government has put some green energy initiative incentives into place over the past few years. But many of the federal tax credits available to incentivize green energy initiatives may be reduced and/or expire at the end of the year (2021).
Vehicle Tax Credits
Incentives available toward vehicle tax credits in 2021 include:
Electric Vehicles (EVs) Federal Tax Credit
Substantial federal tax credits of up to $7,500 to put toward your tax liability are available for new battery electric and plug-in hybrid EVs. Not all electric vehicles qualify for the tax credit. And the tax credit amount will vary based on multiple factors, such as the vehicle’s battery size. The expiration date for tax credits varies by manufacturer and phases out over time, dependent on when an automaker hits the benchmark of selling 200,000 qualified vehicles. For a full list of vehicle eligibility (by manufacturer) and the amount of the qualifying credit available visit the IRS website.
Tax credits are also available for leasing an EV; however, the tax credit goes to the manufacturer. Dealerships often factor the tax credit into the overall cost of the lease (but are not required to). So, inquire with the dealership sales representative to find out if/how it is being applied for you.
Fuel Cell Motor Vehicle Federal Tax Credit
Federal tax credits are available for the purchase of fuel cell motor vehicles too. The largest tax credits, up to $8,000 are applied toward purchases of qualified light-duty fuel cell vehicles, depending on the vehicle’s fuel economy. Some medium- and heavy-duty fuel cell vehicles may also qualify for lower tax credits based on vehicle weight. Learn more about the Fuel Cell Motor Vehicle Federal Tax Credit on the U.S. Department of Energy website.
Charging Station Incentives
Alternative fuel infrastructure incentives are available from the federal government for commercial applications and residential consumers through the remainder of the year (2021).
Alternative Fuel Infrastructure Federal Tax Credits
Federal tax credits are available for installation of fueling equipment for natural gas, propane, liquefied hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel. Equipment installed by December 31, 2021, is eligible for a tax credit of up to 30% of the installation cost, with a maximum allotted credit of $30,000. And fueling station owners installing qualified fueling equipment at multiple sites are allowed to use the credit towards each location. Some restrictions may apply. Visit the Federal Alternative Fuel Infrastructure Tax Credit page on the U.S. Department of Energy website to learn more.
And residential consumers who purchase qualified residential fueling equipment before December 31, 2021, may also qualify for a federal tax credit of up to $1,000. For more details on claiming this credit, see IRS Form 8911 and the corresponding IRS Form 8911 Instructions.
Federal Renewable Energy Tax Credit Incentives
In order to encourage more widespread adoption of renewable energy, the federal government extended retroactively the Consolidated Appropriations Act, 2021. It provides federal tax credits for various renewable energy systems, such as solar energy or photovoltaic systems. The tax credit percentage allowed decreases over time, until it expires on December 31, 2023.
The Renewable Energy Tax Credit Timetable:
• 30% for systems placed in service by 12/31/2019
• 26% for systems placed in service after 12/31/2019 and before 01/01/2023
• 22% for systems placed in service after 12/31/2022 and before 01/01/2024
Residential properties, both principal residences and second homes (that are not rental properties) qualify. These can be existing homes or new construction – both qualify. Plus, residences must meet other requirements, such as specific performance metrics to qualify.
Equipment Tax Credits for Primary Residences
Existing homes serving as a principle residence may also qualify for additional equipment tax credits. Qualifying residences may receive a tax credit for 10% of the equipment cost, up to $500. Installation costs are not included. For more details, visit the ENERGY STAR website page on Non-Business Energy Property Tax Credits.
Federal Tax Credit Incentives for Home Builders
Tax credits for home builders constructing new energy efficient homes have been extended through December 31, 2021. Home builders are eligible for tax credits that meet specific energy savings requirements. And the Internal Revenue Service (IRS) has issued guidance, providing information about the certification process the builder must complete to qualify for the credit.
• IRS Notice 2006-28 provides guidance for the credit for building energy-efficient manufactured homes.
• IRS Notice 2006-27 provides guidance for the credit for building energy-efficient homes other than manufactured homes.
Tax Deduction Incentives for Commercial Buildings
The Consolidation Appropriations Act of 2021 also made permanent tax deduction allowances for owners or designers of commercial buildings and/or systems that meet specific energy usage reduction requirements. Tax deductions of up to $1.80 per square foot are available if qualified. To apply for the tax deductions, commercial buildings must:
• Have buildings or systems placed into service after December 31, 2017.
• Model energy usage on IRS qualified software for calculating energy savings.
Get the Most Out of Green Energy Initiative Incentives
Engineering PLUS technology consultants are experts at developing project plans that best incorporate key green energy initiatives that take advantage of federal incentives available. Let our team guide you toward a greener, more sustainable future. Visit our green energy page to learn more.