One benefit for homeowners that was attached to the economic bailout package passed in October included new and extended tax benefits for alternative energy or reductions in energy consumption. The Emergency Economic Stabilization Act of 2008 included an extension to 2016 of the 30 percent tax credit for adding solar hot water or solar voltaic panels to a home. (Solar voltaic panels create electricity for domestic use.)
The new law also removed a $2,000 cap on the solar voltaic credit. This means that a homeowner installing a typical $20,000 solar electric cell system would be able to claim a $6,000 credit effective for solar panels placed in service or completed after December 31, 2008. The bill allows individual taxpayers to use the credit to offset Alternative Minimum Tax liability (up to $2,000 in 2008) and to carry unused credits forward to the next succeeding taxable year. The $2,000 monetary cap on solar water heating panels was not lifted and remains in effect. A 30 percent tax credit also applies to installing a small wind turbine or geothermal heat pump.
For more information, consult your tax professional or visit the Tax Incentives Assistance Project (TIAP) website. There you can find FAQs, IRS tax forms and other useful information regarding alternative energy savings.