One Year Not Enough for Energy Efficiency Tax Incentives

Release Date: Wednesday, December 3, 2014

As the Senate turns to vote on the tax extenders package passed 378-46 Wednesday by the House, the Alliance to Save Energy urges congressional leaders to extend the energy efficiency tax incentives beyond 2014.  ​

Last week House and Senate leadership reached an agreement on a broad two-year deal that would reinstate nearly 50 expired tax breaks – including energy efficiency tax credits for commercial building improvements, homeowners and home builders – in exchange for making several business tax deductions permanent. The Obama administration threatened a veto of the agreement, citing a lack of tax credits for low-income workers and families with children. 

On Wednesday, the House passed H.R. 5771, a piecemeal tax extenders bill that would extend these important energy efficiency provisions retroactively for 2014 only.  

 “A one-year, retroactive extension of the energy efficiency incentives is simply not enough,” said Alliance President Kateri Callahan. “These energy saving provisions help consumers overcome the upfront cost barriers associated with efficiency improvements that are proven not only to pay for themselves, but to provide long-term savings.” Callahan continued, “A primary goal of these incentives is to do just that – incent homeowners and businesses to invest in energy efficiency. A short-term retroactive extension creates uncertainty and does little to spur the market.”

The non-business property and new homes tax credits have proven effective and are important, considering American homes use almost 25 percent of the energy consumed in the United States. In only four years, the percentage of qualifying energy efficient new homes grew from practically zero to 10.5 percent. The 25C tax credit, which allows homeowners to receive a credit for new energy-efficient appliances including water heaters, furnaces and air-conditioners, has been used by over 10 million homeowners from 2009 to 2011.  

While the 179D tax deduction for commercial efficiency improvements is extended through 2015 in the House bill, the planning, permitting and construction schedule for commercial buildings makes a one-year extension less useful since projects will need to be placed in service by December of 2015 to be eligible – a timeframe that is simply too short for many to take advantage of the deduction.   

 “If extended, these bipartisan energy efficiency provisions will continue creating thousands of jobs, saving consumers money on their energy bills and making our economy more competitive,” said Callahan. “We are in the waning hours of the 113th Congress; in order to deliver these important benefits, lawmakers need to act now and extend the energy efficiency tax incentives through, if not beyond, 2015.”