Tax Relief Act Provides Critical Extensions for Cleantech

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The left is not fully satisfied. Neither is the right. However, the recently enacted “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” (Tax Relief Act) provides significant relief to the energy industry and alleviates the pressure of trying to seal the deal on many projects before the end of the year.

Of particular note, the grant in lieu of tax credit provisions related to the investment tax credit has been extended for one additional year. Now, qualifying property, including wind turbines and solar panels must be placed into service by the end of 2011 or satisfy the applicable requirements that construction began by the end of 2011. The stress of properly structuring a deal to qualify for the grant by the end of this year is now relieved. Have a great holiday!

The grant was not the only energy related provision extended. For individuals looking to make energy efficient improvements on their homes, the tax credit is extended for one additional year. However, the 30% tax credit (limited to $1,500) that existed for 2009 and 2010 is reduced to 10% (limited to $500) in 2011. In addition, the credit is limited to certain amounts based on the type of energy efficient improvement made.

Prior to 2010, contractors were eligible for maximum tax credit of $2,000 per home for construction of a new energy efficient home. This credit has now been extended retroactively for 2010 and renewed for 2011.

In addition, the Tax Relief Act extends the income and excise tax credit and refund provisions for bio-diesel and renewable diesel fuel. This extension is retroactive and applies for 2010 and 2011.

For those of you wondering if purchasing charging equipment for alternative fuel vehicles will get you a tax credit, the answer is yes. However, the credit for 2011 is reduced to 30%, limited to $30,000 for depreciable property (businesses) and $1,000 for non-depreciable property (individuals).

That is a quick run-down on some of the energy related provisions contained within the Tax Relief Act. The biggest impact will no doubt be extension of the grant provisions and extension of the bio-diesel related provisions, which will provide some certainty for the next year and should bolster further development.

About Author

Walter’s contributions to CleanTechies over the past 4 years have been instrumental in growing the publications social media channels via his ongoing editorial and data driven strategies. He is the founder and managing director of Sunflower Tax, a renewable energy tax and finance consultancy based in San Diego, California. Active in the San Diego clean technology community, participating in events sponsored by CleanTech San Diego, EcoTopics, and Cleantech Open San Diego, Walter has also been a presenter at numerous California Center for Sustainability (CCSE) programs. He currently serves as an adjunct professor at the University of San Diego School of Law where he teaches a course on energy taxation and policy.

2 Comments

  1. The 2011 credit is a steep reduction from the 2009-2010 credit. And there are caps for certain measures (e.g., furnaces/windows) that make it much less exciting. However, it may be enough to help people move to more efficient products if they intended to move ahead anyway. A summary of the different levels and criteria is at: http://greenhomesamerica.com/the-learning-center/government-incentives/42-2011-federal-tax-credit.aspx

    I’d note that there are a variety of state and local incentives/rebates/credit, and depending on where you live, these, combined with the federal credit, can add up to real savings.

    Thanks,

    Mike

  2. Prior to 2010, contractors were eligible for maximum tax credit of $2,000 per home for construction of a new energy efficient home. This credit has now been extended retroactively for 2010 and renewed for 2011.

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