Energy-Efficiency Tax Breaks for Builders, Commercial Tennants, Appliance Makers Lower Energy Bills and Federal Taxes
Energy-efficiency tax breaks for builders, commercial tenants and appliance makers
Washington, D.C., June 2007 – Thanks to an extension earlier this year of federal tax incentives, home builders and commercial building owners can lower both the energy costs of their buildings for years to come and their federal tax liability through 2008 by incorporating energy efficiency in their properties. Tax breaks also are available for energy-saving improvements to existing commercial buildings through 2008; to manufacturers of high-efficiency refrigerators, clothes washers, and dishwashers produced this year; and to business purchasers of certain hybrid vehicles.
Full details are spelled out at www.energytaxincentives.org, a website developed by the Alliance to Save Energy and other energy-efficiency organizations.
“We urge all eligible businesses and manufacturers to improve their bottom lines, help extend the nation’s energy supplies, and lessen their contributions to air pollution and climate change by taking full advantage of the federal energy-efficiency tax incentives,” said Alliance President Kateri Callahan.
Through tax year 2008, owners or tenants can receive a federal tax deduction of up to $1.80 a square foot for cutting by at least half the annual heating, cooling, ventilation, water heating, and interior lighting costs of new or renovated buildings that meet the national ASHRAE Standard 90.1-2001. (Only buildings covered by the scope of that ASHRAE standard are eligible.) For government properties, building designers can claim the tax deduction.
Lesser deductions, of $.60 per square foot, are available for less sweeping energy-efficiency measures – specifically for improvements to only one of three building systems – the building envelope, the lighting system, or heating and cooling system. To claim that deduction, the owner or tenant must reduce total heating, cooling, ventilation, water heating or interior lighting energy use by 16.66 percent (that percentage being one-third of the higher 50 percent goal). If the owner or tenant makes energy-efficiency improvements of 16.66 percent to two of the three systems, an $.80 per square foot tax deduction is available.
Also available through December 2008 are federal tax credits for builders of site-built or manufactured homes. Such homes would be projected to save at least half of the heating and cooling energy of a comparable home that meets the standards of the 2003 International Energy Conservation Code (including supplements). A $2,000 credit is available for each qualifying home in the year it is sold.
Site-built homes must be certified to use at least 50 percent less energy than a comparable home that complies with the standards provided in the 2003 IECC (including supplements) and uses a SEER 13 air conditioner. Builders of manufactured homes that are certified to save 30 percent, or that qualify for the Environmental Protection Agency’s ENERGY STAR Homes program, can receive a tax credit of $1,000 per home.
Qualifying homes feature a range of innovative design and construction methods that increase energy efficiency, such as better-insulated foundations, walls, and ceilings; high-efficiency windows; well-sealed framing and air ducts; and high-efficiency heating and cooling systems.
For appliance manufacturers, the tax credits are as follows:
- Clothes washers: $100 for models that meet current ENERGY STAR criteria, which became effective on January 1, 2007.
- $75 for models that save at least 15 percent relative to 2001 federal standards – the same as the current ENERGY STAR criteria. (This credit is available only for tax year 2006.)
- $125 for models that save at least 20 percent relative to 2001 federal standards.
- $175 for models that save 25 percent or more relative to 2001 federal standards.
- Dishwashers: $32.31 for models that meet current ENERGY STAR criteria, which became effective January 1, 2007.
Through December 31, 2010, buyers and lessees of certain hybrid vehicles can receive federal tax credits. Credits are based on a complex formula determined by vehicle weight, technology, and fuel economy compared to base year models.