Renewable energy tax credits are financial benefits that are available to people who make use of such energy forms. The different forms of tax credits and the benefits that can be derived from them are considered here.
Renewable energy production facilities can cost a lot to install and operate. Though certain companies have made substantial steps in reducing the costs of installation and operation, tax credits are essential on order to place them on a level playing field with fossil fuels.
Rising prices in terms of the costs of oil and gas prices as well as the war in Iraq and other environmental problems have led to different problems. The United States is also concerned about the energy security of all our power sources. The United States recognizes the need and power of renewable energy as an alternative fuel solution and has consistently supported its development through the use of federal income tax credits as well as incentives.
In the year 2005 President George Bush signed the Energy Policy Act of 2005 into law. The Congress took about four years to pass after reviewing several versions of the policy. It extended tax credits for winds and biomass energies for an additional period of two more years. It also included additional tax credits for solar, geothermal and ocean energy as well.
Solar tax credits apply to both residential and business users. However, these tax credits only apply to equipment installed between 1/1/06 and 12/31/08. Equipment that is installed includes solar systems which generate electricity and heat, cool and provide hot water to structures. This equipment should also be operational in the first year that credit is taken and the taxpayer should be the original user. The credit is about 30% with a $2,000 cap for each particular unit used by a residential user. The credit is 30% with no business cap specified for corporate users. At the end of the grace period the corporate tax credit will return to its previous level of 10%.
Geothermal corporate credit remains an 10% and has no stated maximum. This credit doesn’t apply to geothermal heat pumps and it is only limited to geothermal energy equipment which produces, uses and distributes energy that comes from geothermal deposits. A personal tax credit of 10% with a $300 maximum can also be taken for geothermal heat pumps.
The federal government also includes production tax credits for renewable energies. These renewable energies tend to have credits that permit companies to write off the investment against other investments. This was due to a major push of support for certain renewable energy technologies. The credit available was then extended up till December 31 2008. Credits available are 1.9 cents per kwH of geothermal, wind, closed looped biomass and 1 cent per Kwh for hydroelectric power, landfill gas, municipal soled waste and open loop biomass for the first ten years of operation.
Somewhat similar to the production tax credits were the provisions for renewable energy production incentives known as REPI for state as well as local governments along with nonprofit electrical cooperatives. The subsequently enacted law also include
