Many local, state and federal initiatives help consumers make smart choices while improving energy efficiency and reducing greenhouse gas (GHG) emissions.
Our previous column highlighted state programs that help homeowners save thousands of dollars in purchase and installation costs and then enjoy lower energy costs over many years. Energy-smart decisions are good for the environment and make economic sense as well.
Although many programs and incentives are managed at state level, there are significant, powerful federal energy programs.
Solar Investment Tax Credit
The Solar Investment Tax Credit (ITC) is a tremendously successful federal policy that has helped solar energy grow nationally by 10,000% since 2006. The program has been extended until the end of 2023. It offers a 26% tax credit for solar systems installed on residential and commercial properties. Thus 26% of the cost of the system is returned as a credit when federal income taxes are filed. The tax credit will remain 26% for systems placed in service until the end of 2022. It will drop to 22% in 2023 and then disappear for residential systems.
Homeowners have almost two years to install solar with a federal tax credit – but don’t wait. CMP’s recent electric rate hikes make this an optimal time to consider solar energy. Solar panels usually pay for themselves in six to 10 years.
Residential Renewable Energy Tax CreditThe federal program Residential Renewable Energy Tax Credit includes a credit for geothermal heat pumps. These systems, called ground source heat pumps, take advantage of the constant temperature of the ground below the frost line to heat in the winter and cool in the summer. They are the cleanest, most efficient way to heat your home. If you are committed to saving money on energy and reducing your GHG emissions, coupling a solar system with a ground source heat pump is the way to go.
Federal tax credits for geothermal systems are the same as for solar systems (26% in 2022 and 22% in 2023). Efficiency Maine lists registered geothermal heat pump contractors and – more good news – provides a $3,000 rebate on geothermal heat pumps – on top of the federal tax credit.
Plug in Electric Vehicle Tax Credit
Another effective federal program is the Plug in Electric Vehicle (PEV) Tax Credit. Although this tax credit has expired for GM and Tesla, many EVs qualify for a federal tax credit of up to $7,500, on top of Efficiency Maine’s rebate of $2,000 for battery EVs and $1,000 for PEVs (and larger rebates for income-qualified buyers).
The amount of federal credit depends on the size of the electric battery in the vehicle as well as your tax situation. To calculate the current tax credit for an EV, see fueleconomy.gov. There is even an additional federal tax credit of up to $1,000 on a charging station installation. Coupling your PEV and charging station with power from the sun is the cleanest way to drive.
Stay tuned for more exciting news on federal tax incentives for PEVs. Although the future of the Build Back Better Act remains uncertain, its current version contains a base credit of $4,000, an additional $3,500 for larger battery packs, $4,500 if the vehicle is made here with a union work force, and $500 if battery cells are made in this country. That’s $12,500 in potential credits. The bill’s current language allows vehicles manufactured by Tesla and GM to qualify for the credit.