The American Recovery and Reinvestment Act
of 2009 (ARRA) provides a number of energy tax incentives for both small and large
businesses. Businesses and individuals who take advantage of these energy-saving steps
this year may result see bigger tax savings next year.
Here are some of the major provisions that apply:
1. Extension of Renewable Energy Production Tax Credit:
This law extends the “eligibility dates” of a tax
credit for business facilities that use wind, closed-loop biomass, open-loop biomass,
geothermal energy, municipal solid waste, qualified hydropower and marine and hydrokinetic
renewable energy. The "placed in service date” is now Dec. 31, 2012 for wind
facilities and Dec. 31, 2013 for the other facilities.
2. Election of Investment Credit in Lieu of Production
Credit:
Businesses that operate facilities that produce electricity
from wind and some other renewable resources after Dec. 31, 2008 can now choose either the
energy investment tax credit or the production tax credit.
3. Repeal of Certain Limits on Business Credits for
Renewable Energy Property:
ARRA repeals the $4,000 limit on the 30 percent tax credit
for small wind energy property and the limitation on property financed by subsidized
energy financing for property placed in service after Dec. 31, 2008.
4. Coordination with Renewable Energy Grants:
Business taxpayers can apply for a grant in lieu of
claiming either the energy investment tax credit or the renewable energy production tax
credit for property placed in service in 2009 or 2010.
5. Temporary Increase in Credit for Alternative Fuel
Vehicle Refueling Property:
Qualified property placed in service in 2009 and 2010 is
now eligible for a 50 percent credit, and the per-business location limit increases to
$50,000. Property relating to hydrogen remains at the 30 percent rate, but the
per-business location limit rises to $200,000.
In addition, there are several other energy credits
available that small businesses should be aware of, such as:
6. Residential Energy Property Credit:
The new law increases the energy tax credit for homeowners
who make energy efficient improvements to their existing homes. The new law increases the
credit rate to 30 percent of the cost of all qualifying improvements and raises the
maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010. The
credit applies to improvements such as adding insulation, energy efficient exterior
windows and energy-efficient heating and air conditioning systems.
7. Plug-in Electric Drive Vehicle Credit:
The new law modifies the credit for qualified plug-in
electric drive vehicles purchased after Dec. 31, 2009.
8. Plug-In Electric Vehicle Credit:
The new law also creates a special tax credit for two types
of plug-in vehicles — certain low-speed electric vehicles and two- or three-wheeled
vehicles.
More information on these business energy tax incentives
are available on IRS.gov at www.irs.gov/newsroom/article/0,,id=204335,00.htm.
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