|Incentive Type:||Personal Tax Credit|
|Eligible Renewable/Other Technologies:||Solar Water Heat, Photovoltaics, Wind, Fuel Cells, Geothermal Heat Pumps, Other Solar Electric Technologies, Fuel Cells using Renewable Fuels|
|Maximum Incentive:||Solar-electric systems placed in service before 1/1/2009: $2,000
Solar-electric systems placed in service after 12/31/2008: no maximum
Solar water heaters placed in service before 1/1/2009: $2,000
Solar water heaters placed in service after 12/31/2008: no maximum
Wind turbines placed in service in 2008: $4,000
Wind turbines placed in service after 12/31/2008: no maximum
Geothermal heat pumps placed in service in 2008: $2,000
Geothermal heat pumps placed in service after 12/31/2008: no maximum
Fuel cells: $500 per 0.5 kW
|Eligible System Size:||Fuel cells: 0.5 kW minimum|
|Equipment Requirements:||Solar water heating property must be certified by SRCC or a comparable entity endorsed by the state where the system is installed. At least half the energy used to heat the dwelling's water must be from solar. Geothermal heat pumps must meet federal Energy Star criteria. Fuel cells must have electricity-only generation efficiency greater than 30%.|
|Carryover Provisions:||Excess credit generally may be carried forward to next tax year|
|26 USC § 25D
8/8/2005 (subsequently amended)
|Authority 2:||IRS Form 5695 & Instructions: Residential Energy Credits|
|Incentive Type:||Corporate Tax Credit|
|Eligible Renewable/Other Technologies:||Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Wind, Biomass, Geothermal Electric, Fuel Cells, Geothermal Heat Pumps, CHP/Cogeneration, Solar Hybrid Lighting, Fuel Cells using Renewable Fuels, Microturbines, Geothermal Direct-Use|
|Applicable Sectors:||Commercial, Industrial, Utility, Agricultural|
|Amount:||30% for solar, fuel cells and small wind;*
10% for geothermal, microturbines and CHP*
|Maximum Incentive:||Fuel cells: $1,500 per 0.5 kW
Microturbines: $200 per kW
Small wind turbines placed in service 10/4/08 - 12/31/08: $4,000
Small wind turbines placed in service after 12/31/08: no limit
All other eligible technologies: no limit
|Eligible System Size:||Small wind turbines: 100 kW or less*
Fuel cells: 0.5 kW or greater
Microturbines: 2 MW or less
CHP: 50 MW or less*
|Equipment Requirements:||Fuel cells, microturbines and CHP systems must meet specific energy-efficiency criteria|
|Authority 1:||26 USC § 48|
|Authority 2:||Instructions for IRS Form 3468|
|Authority 3:||IRS Form 3468|
Note: The American Recovery and Reinvestment Act of 2009 does not allow taxpayers eligible for the residential renewable energy tax credit to receive a U.S. Treasury Department grant instead of taking this credit.
Established by the Energy Policy Act of 2005, the federal tax credit for residential energy property initially applied to solar-electric systems, solar water heating systems and fuel cells. The Energy Improvement and Extension Act of 2008 (H.R. 1424) extended the tax credit to small wind-energy systems and geothermal heat pumps, effective January 1, 2008. Other key revisions included an eight-year extension of the credit to December 31, 2016; the ability to take the credit against the alternative minimum tax; and the removal of the $2,000 credit limit for solar-electric systems beginning in 2009. The credit was further enhanced in February 2009 by The American Recovery and Reinvestment Act of 2009 (H.R. 1: Div. B, Sec. 1122, p. 46), which removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.
A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is at a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The excess credit may be carried forward until 2016, but it is unclear whether the unused tax credit can be carried forward after then. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.
Solar water-heating property
Fuel cell property
Small wind-energy property
Geothermal heat pumps
Significantly, The American Recovery and Reinvestment Act of 2009 repealed a previous limitation on the use of the credit for eligible projects also supported by "subsidized energy financing." For projects placed in service after December 31, 2008, this limitation no longer applies.
The federal Energy Policy Act of 2005 established a 30% tax credit (up to $2,000) for the purchase and installation of residential solar electric and solar water heating property and a 30% tax credit (up to $500 per 0.5 kW) for fuel cells. Initially scheduled to expire at the end of 2007, the tax credits were extended through December 31, 2008, by the Tax Relief and Health Care Act of 2006.
In October 2008, the Energy Improvement and Extension Act of 2008 extended the tax credits once again (until December 31, 2016), and a new tax credit for small wind-energy systems and geothermal heat pump systems was created. In February 2009, The American Recovery and Reinvestment Act of 2009 removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after December 31, 2008.
Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov
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