With a changing political landscape, some clients of ours have been wondering whether certain renewable energy tax breaks were still available. Some of these tax breaks expired at the end of 2016 and were not renewed. Others are still active. This page will give you the run down on changes to “green” energy tax breaks.
Residential Solar Energy Credit
This is one of the largest “green energy” tax credits currently available, and it’s still on the table in 2017. There’s never been a better time to go solar. Homeowners can claim a federal income tax credit equal to 30% of the cost of purchasing and installing solar equipment. This equipment can be costly, so this tax credit could mean big bucks for homeowners hoping to convert to a renewable energy system.
Though there are no income limits for this credit (a billionaire could claim it), there are some exceptions. This credit can be claimed on vacation properties, but this credit cannot be claimed on rental properties. Also, this credit cannot be claimed on solar heating equipment that heats a swimming pool or hot tub.
The credit is claimed by including Form 5695 with the client’s Form 1040. Clients should keep proof of how much is spent and records of when the work was completed. The credit can only be claimed on the year in which the system was installed.
Changes to the 30% Credit Opportunity
In 2016 clients could claim this credit for installing wind energy systems, geothermal systems, and fuel cells. In 2017 the credit is limited to solar energy systems.
Credit for Plug-in Vehicles
A tax credit worth up to $7500 is available in 2017. This credit is available for purchasing new (not used) electric vehicles that draw energy from an external source, hence plug-in. The credit can be claimed on four-wheeled street vehicles (not farm equipment or semi trucks).
The credit starts a $2500 for a vehicle powered by a four kilowatt-hour battery. Another $417 is available for every additional kilowatt-hour of battery capacity beyond four. The max for this credit is $7500.
There are no income limits for this credit. It can be claimed by including Form 8936 with the client’s return.
The renewable energy tax credit of 2016 has been reduced to a solar energy tax credit. The credit for plug-in vehicles is still available.