Currently, taxpayers may be able to claim two tax credits for
residential energy efficiency: one is scheduled to expire at the
end of 2011, whereas the other is scheduled to expire at the end of
2016. The nonbusiness energy property tax credit (Internal Revenue
Code (IRC) 25C) currently provides homeowners with a tax credit for
investments in certain high-efficiency heating, cooling, and
water-heating appliances, as well as tax credits for
energy-efficient windows and doors. For installations made during
2011, the credit rate was 10%, with a maximum credit amount of
$500. The credit available during 2011 was less than what had been
available during 2009 and 2010, when taxpayers were allowed a 30%
tax credit of up to $1,500 for making energy-efficiency
improvements to their homes. The residential energy efficient
property credit (IRC 25D), which provides a 30% tax credit for
investments in properties that generate renewable energy, such as
solar panels, is scheduled to remain available through 2016.
Advances in energy efficiency have allowed per-capita residential
energy use to remain relatively constant since the 1970s, even as
demand for energy-using technologies has increased. Experts
believe, however, that there is unrealized potential for further
residential energy efficiency. One reason investment in these
technologies might not be at optimal levels is that certain market
failures result in energy prices that are too low. If energy is
relatively inexpensive, consumers will not have a strong incentive
to purchase a technology that will lower their energy costs. Tax
credits are one policy option to potentially encourage consumers to
invest in energy-efficiency technologies. Residential
energy-efficiency tax credits were first introduced in the late
1970s, but were allowed to expire in 1985. Tax credits for
residential energy efficiency were again enacted as part of the
Energy Policy Act of 2005 (P.L. 109-58). These credits were
expanded and extended as part of the American Recovery and
Reinvestment Act of 2009 (ARRA; P.L. 111-5). The Section 25C credit
was again extended, at a reduced rate, and with a reduced cap,
through 2011, as part of the Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act of 2010 (P.L. 111-312).
Although the purpose of residential energy-efficiency tax credits
is to motivate additional energy efficiency investment, the amount
of the investment resulting from these credits is unclear.
Purchasers investing in energy-efficient property for other
reasons-for example concern about the environment-would have
invested in such property absent tax incentives, and hence stand to
receive a windfall gain from the tax benefit. Further, the fact
that the incentive is delivered as a nonrefundable credit limits
the provision's ability to motivate investment for low- and middle
income taxpayers with limited tax liability. The administration of
residential energy-efficiency tax credits has also had compliance
issues, as identified in a recent Treasury Department Inspector
General for Tax Administration (TIGTA) report. There are various
policy options available for Congress to consider regarding
incentives for residential energy efficiency. One option is to let
the existing tax incentives expire as scheduled. A second option
would be to extend or modify the current tax incentives. S. 3521,
the Family and Business Tax Cut Certainty Act of 2012, would extend
the 25C credit for two years-2012 and 2013. Another option would be
to replace the current tax credits with a grant or rebate
program-the Home Star Energy Retrofit Act of 2010 (H.R. 5019 / S.
3177 in the 111th Congress), for example. Grants or rebates could
be made more widely available, and not be limited to taxpayers with
tax liability. Enacting a grant or rebate program, however, would
have additional budgetary cost.
General
Is the information for this product incomplete, wrong or inappropriate?
Let us know about it.
Does this product have an incorrect or missing image?
Send us a new image.
Is this product missing categories?
Add more categories.
Review This Product
No reviews yet - be the first to create one!
Welcome to Loot.co.za!
Sign in / Register |Wishlists & Gift Vouchers |Help | Advanced search
