The Energy Policy Act of 2005
The Energy Policy Act of 2005 (EPACT), signed by President Bush on August 8, 2005, offers businesses federal tax credits and deductions beginning in January 2006 for building energy- efficient buildings, and for improving the energy efficiency of commercial buildings. Most of these tax credits remain in effect through 2008. Beginning in tax year 2006, businesses will be able to itemize these energy efficiency expenditures on their federal income tax form, which will lower the total amount of tax they owe the government. IRC Section 179D allows deductions for qualifying energy efficiency equipment as an accelerated deduction, 100% of which can be taken in the same tax year or carried forward to subsequent years.
Link to IRS 179D Statute
Energy-efficient Commercial building deduction. This provision allows a tax deduction for energy-efficient commercial buildings that reduce annual energy and power consumption by 40-50% compared to the American Society of Heating, Refrigerating, and Air Conditioning Engineers (ASHRAE) 2001 standard. The deduction would equal the cost of energy-efficient property installed during construction, with a maximum deduction of $1.80 per square foot of the building. A partial deduction of 60 cents per square foot is provided for building subsystems, and percentages of the total deduction for lighting are also allowed.
See Our EPAct Tax Deduction Process
Biodiesel/Alternative Fuels
Small producer biodiesel and ethanol credit. This credit will benefit small agri-biodiesel producers by giving them a 10 cent per gallon tax credit for up to 15 million gallons of agri-biodiesel produced. In addition, the limit on production capacity for small ethanol producers increased from 30 million to 60 million gallons. This is effective until the end of 2008.
Buildings
Credit for business installation of qualified fuel cells, stationary microturbine power plants, and solar equipment. This provides a 30% tax credit for the purchase price for installing qualified fuel cell power plants for businesses, a 10% credit for qualifying stationary microturbine power plants and a 30% credit for qualifying solar energy equipment. This is effective January 1, 2006 through December 31, 2007.
We will work with you to understand how you can best take advantage of federal credits and deductions for your unique energy efficiency program. Federal tax credits may combine with local utility incentives and rebates to dramatically reduce or even eliminate the cost of energy efficiency retrofits or new equipment and construction. |
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Tax credits are available to buyers of hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles. The tax credit amount is based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models. These credits are available for vehicles placed in service starting January 1, 2006. For hybrid and diesel vehicles made by each manufacturer, the credit will be phased out over 15 months starting after that manufacturer has sold 60,000 eligible vehicles. For vehicles made by manufacturers that have not reached the end of the phase-out, the credits will end for vehicles placed in service after December 31, 2010. See the IRS Website for updated information  . |
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Tax credits are available for qualified solar water heating and photovoltaic systems. The credits are available for systems "placed in service" from January 1, 2006 through December 31, 2008. The tax credit is for 30% of the cost of the system, up to $2,000. This credit is not limited to the $500 home improvement cap.
There is a consumer tax credit of up to 30% of the cost (up to $500 per 0.5 kW of capacity maximum) for installing a “qualified” fuel cell and microturbine systems. The credits are available for systems “placed in service” from January 1, 2006 through December 31, 2007. This credit is not limited to the $500 home improvement cap.
See: Home Owner Tax Credit Full Summary |
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