CCH Logo
Contact Us | CCH Online Store | Site Map    

  
navigation tabnavigation tab Home 
navigation tabnavigation tab About Us 
navigation tabnavigation tab Order Products 
navigation tabnavigation tab Press Center 
navigation tabnavigation tab Customer Service 
navigation tabnavigation tab Career Opportunities 
navigation tab
   Home
 

CCH can assist you with stories, including interviews with CCH subject experts. Also, the 2009
CCH Whole Ball of Tax
is available in print. Please contact:
 
Leslie Bonacum
(847) 267-7153
mediahelp@cch.com
 
Neil Allen
(847) 267-2179
neil.allen@wolterskluwer.com

Visit the CCH Whole Ball of Tax site often as new releases and other updates will be posted throughout the tax season.

CCH provides special CCH Tax Briefings on key topics at: CCHGroup.com/Legislation/Briefings.

 
2009 CCH Whole Ball of Tax
Release (15) | Back to WBOT

2009 CCH Whole Ball of Tax

Contact:
Leslie Bonacum
, 847-267-7153, mediahelp@cch.com
Neil Allen, 847-267-2179, neil.allen@wolterskluwer.com

It’s Easier Being Green: Energy-friendly Tax Incentives Return, Expand

(RIVERWOODS, ILL., January 2009) – Although 2008 started out bleak for energy-conscious taxpayers hoping for a few tax breaks, the year got greener and this trend is likely to continue under the new administration, according to CCH, a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services (CCHGroup.com).

“While many of the energy-efficient credits were left to expire at the end of 2007 or 2008, they were reinstated or expanded under the Emergency Economic Stabilization Act of 2008,” said CCH Senior Federal Tax Analyst Mildred Carter, JD. “In addition, the new administration has clearly indicated it supports tax breaks for wind, solar biomass and other alternative energy sources, so this is likely to be an area of growing tax-friendly policies.”

Hybrids Climb Even as Tax Breaks Drop; Electronic Plug-ins Added to Tax-Favored Vehicles; Even Bicycles Get a Boost

Hybrids may be the best known of the alternative-fuel vehicles receiving tax breaks. However, vehicles powered by fuel cells, advanced “lean burn” diesel and other alternative power sources also receive federal tax breaks. Most recently, under the Emergency Economic and Stabilization Act of 2008, plug-in electric drive motor vehicles have been added to the list of tax-favored vehicles. Each type of vehicle has to meet its own set of standards, but many of the qualifications are the same. For example, a vehicle must be new; it must be purchased for use by the taxpayer and not for resale; and it must be made by an auto manufacturer.

Under the new law, even bicycles were given the nod, with employers now being allowed to exclude from employee income up to $20 per month in fringe benefits paid to employees for commuting by bike. This went into effect on January 1, 2009.

“Tax incentive or not, with gas prices reaching record heights in 2008, many individuals flocked to hybrids and other more fuel-efficient vehicles or left the cars in the garage and took public transportation or rode bicycles more often,” said Carter. “Whether this behavior will be sustained with lower gas prices remains to be seen, but the awareness has now been established.”

The most recent credit, the plug-in electric drive motor vehicle credit, is available for cars put into service starting in 2009 and remains in effect through 2014. The credit as it applies to consumer-focused plug-in vehicles ranges from $2,500 to $7,500 depending on certain factors, such as battery capacity, determining the value of the credit. For example, there is an additional $200 of credit for each added kilowatt-hour after the minimum 4 kilowatt-hour required. Although highway-speed plug-in vehicles are not widely available, the tax credit applies to the first 250,000 qualifying vehicles sold, adding further incentive for automakers to move forward with their plug-in vehicle plans.

The Energy Policy Act of 2005 provided for tax credits for different types of energy-efficient vehicles, including hybrids, alternative-fuel vehicles and fuel-cell vehicles. These credits apply to vehicles put into services any time after 2005 and, depending upon the type of alternative vehicle chosen, the credit is available through 2010 or 2014.

For hybrid vehicles, the federal tax break is good on hybrid cars purchased through 2010, but it also is tied to the number of vehicles the manufacturer sells. Once the manufacturer reaches that number for a given model, the incentive starts to disappear. Because of the popularity of certain hybrids, credits are not available from many manufacturers and dwindling from others. For example, credits are no longer available for Toyota models, including certain Prius, Highlander and Lexus hybrid vehicles purchased after September 30, 2007, and credits phased out as of January 1, 2009, for Honda vehicles. Tax credits still are available for GM, Ford and a few other hybrid manufacturers.

The specific credit amount available for hybrids varies depending on the weight class of the vehicle, its fuel economy and lifetime fuel savings. The fuel economy credit is calculated by comparing the fuel efficiency of the alternative-fuel vehicle to that of a 2002 gasoline-only powered vehicle for city driving. That part of the credit has a range of up to $2,400 for an alternative-fuel vehicle that has a fuel efficiency of 250 percent of the gas-only powered vehicle. The conservation credit is calculated by the lifetime fuel savings of the vehicle and ranges from $250 for savings of at least 1,200 gallons of gasoline to $1,000 for 3,000 gallons.

Alternative-fuel vehicles operating on natural gas, liquefied natural gas, liquefied petroleum or 85-percent methanol alcohol also qualify for the credit. While most of these vehicles are commercial vehicles and trucks, taxpayers have a few car options, including the Honda Civic GX, which operates solely on compressed natural gas. Buyers of these vehicles can receive as much as a $4,000 tax credit in the year they purchase the vehicle. This credit also is good through 2010.

The tax credit on fuel-cell vehicles, which are powered by hydrogen and oxygen fuel cells, also qualify for a two-part credit based on weight class and fuel economy with a vehicle weighing 8,500 pounds or less qualifying for a weight class credit of $8,000 plus a potential fuel economy credit of up to $4,000. The credit for fuel cell vehicles is available through 2014.

Federal Tax Credits Make a Comeback for Energy-efficient Homeowners

For 2008, federal tax breaks for green home initiatives are limited primarily to qualifying home-heating and fuel-cell equipment. For the 2008 tax year, as was the case in 2006 and 2007, homeowners can get a federal tax credit for 30 percent of the cost of buying and installing residential solar water heating and photovoltaic equipment. The maximum credit is $2,000 for each type of solar system. Solar water heaters for swimming pools and hot tubs do not qualify. The 30-percent credit also applies to homeowners who install fuel cells to supply electricity. The maximum credit is $500 for each .5 kilowatt of capacity.

The Emergency Economic Stimulus Act of 2008 extended the residential energy credit in both duration and scope. Now, the credit, which was to expire after 2008, will be in effect through 2016. It now also provides tax credits for residential small wind investment and geothermal heat pumps. Further, taxpayers can use the credit to offset any alternative minimum tax (AMT) obligation.

Looking forward to additional energy-based tax breaks available in 2009 and beyond requires taking a look back at tax credits that expired at the end of 2007 and have been reinstated as part of the Economic Act. Specifically, starting in 2009, taxpayers can again take advantage of a credit for up to 10 percent of the cost of such things as insulation, metal roofs coated with heat-reducing pigments and energy-efficient windows, doors and skylights. The maximum credit is $500, but only $200 can come from expenses for windows. The cost of labor is not counted in figuring this credit.

States Encourage Green Appliance Purchases Through Tax Exemptions

States also provide tax incentives to residents for purchasing alternative-fuel vehicles and making energy-efficient home improvements. Additionally, while federal tax breaks for energy-efficient appliances are geared to manufacturers, many states go much further by encouraging homeowners directly to buy eco-friendly appliances and supplies.

Among the most progressive states is Connecticut, offering a sales and use tax exemption for solar energy-generating systems, energy-efficient appliances and light bulbs as well as residential weatherization products. Massachusetts, Minnesota, New Jersey, New York and Wyoming also exempt certain solar- and wind-powered equipment from sales and use or property tax year round.

An increasing number of states, including Georgia, North Carolina, Texas , West Virginia, Vermont and Virginia, offer “ sales tax holidays” for energy-efficient purchases. Missouri and South Carolina will be adding holidays for 2009 and Maryland’s will begin in 2011.

Whether permanent or annual events, CCH Senior State Tax Analyst Carol Kokinis-Graves, JD, cautions taxpayers to find out specifically what their state’s sales tax exemption rules for appliances are because tax holidays are unique from state to state, with each defining differently the appliances covered and the amount eligible.

“In tough economic times, people become more cost conscious even when they want to be energy efficient. By using a tax holiday to pay zero taxes, they may be able to afford an energy-efficient appliance, which is often more costly than less efficient appliances. This could be the case, particularly in high-tax states such as New York,” said Kokinis-Graves .

About CCH, a Wolters Kluwer business

CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading products are The ProSystem fx® Office, CorpSystem®, CCH® TeamMate, CCH® Tax Research NetWork™, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill.

Wolters Kluwer is a leading global information services and publishing company. The company provides products and services globally for professionals in the health, tax, accounting, corporate, financial services, legal and regulatory sectors. Wolters Kluwer has annual revenues (2007) of €3.4 billion ($4.8 billion), maintains operations in over 33 countries across Europe, North America and Asia Pacific and employs approximately 19,500 people worldwide. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. For more information, visit www.wolterskluwer.com.

-- ### --

nb-09-06


       


   © 2024, CCH INCORPORATED. All rights reserved.   

  Back to Top | Print this Page   
spacer