Can You Write-Off Energy Star Appliances on Your Taxes as Deductions?
Replacing old energy-consuming appliances with newer, more efficient models is an ideal way to save on utility bills. The government has offered financial incentives through income tax credits and rebates to consumers who purchase certain appliances that have an Energy Star label, which is an indication of the appliance's high efficiency.
Energy Star Appliances
The U.S. Department of Energy and the U.S. Environmental Protection Agency jointly created the Energy Star Program. They rate appliances and products, such as refrigerators and windows, to help consumers save money and compare the energy efficiency among products. They also set tough guidelines for efficiency and award products that qualify with an Energy Star label.
Tax Credits, Not Deductions
The federal government gave tax credits for various energy-efficient appliances as well as the installation of solar and wind electricity producing equipment. This program ended December 31, 2010. President Obama, however, signed into law the Tax Relief, Unemployment Insurance Reauthorization And Job Creation Act, which extends energy efficient tax credits, but with more rigorous specifications and with less allowable credit. Appliances must now meet certain Energy Star ratings to qualify. Heating appliances, such as furnaces and boilers, have a credit capped at $150. Air conditioners, air source heat pumps and water heaters are capped at $300, while main circulating fans are at $50. A tax credit is always better for the taxpayer than a tax deduction, since a credit is directly subtracted from any tax owed.
State Rebates
In addition to federal tax credits, states offer rebates on energy savings appliances. The American Recovery And Reinvestment Act of 2009 gave states money to offer rebates to consumers buying energy-efficient appliances. The states have until February, 2012, to spend the money, but unfortunately, a lot of that money has now been disseminated, and many state programs have closed. Rebates cover such appliances as dishwashers, refrigerations, clothes washers, air conditioners, air source heat pumps, electric heat pumps, boilers and water heaters. To find information and the status of your state's energy saver rebate program go online to the energysavers.gov website and click on your state (see Resources).
Business Appliance Write-Offs
Although the federal government does not allow a tax deduction on personal income tax for the purchase of Energy Star appliances, businesses may be able to deduct all or part of the cost as part of their normal business expenses. Individuals who have an office in their home or work out of their home may be able to deduct some of the cost of appliances used in their business, such as a space heater or a room air conditioner. As a general rule, a percentage of the cost can be deducted as part of the "business use of your home," based on the percentage of its personal and business use. Of course, in this case, appliances do not necessarily have be Energy Star rated to be able to be deducted.
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