The Emergency Economic Stabilization Act of 2008 (more frequently referred to as "the bailout," or "the rescue plan" if you happen to be running for president) was passed as a way to save the U.S. banking system and, by extension, the economy. It contains provisions that also help rescue the residential solar power market, as well as tax credits to encourage other types of green investment.
Solar Power Wins Big
One of the things that inhibits the growth of solar power is that up front costs are, well, costly. Those who installed such systems have been eligible for a 30 percent tax credit for most of the past decade (the credit was allowed to expire a few times only to be reenacted the following year), but that tax credit was capped at $2,000. Given that installing a PV system adequate for a typical home costs about $25,000, that "30 percent" tax credit was actually closer to 8 percent because of the cap.
The tax credit had been scheduled to expire at the end of the year, but has now been extended through 2016. It's significant that the $2,000 cap has been removed, so it finally represents a true 30 percent credit. The extension also extends the tax credit to Alternative Minimum Tax (AMT) filers, who had previously been ineligible. The removal of the $2,000 cap and eligibility of AMT filers went into effect in 2009. You are eligible for the tax credit in the year the system is "placed in service.")
Expired Credits Reinstated
Tax credits for green home improvements. that improve energy efficiency, which expired in 2007, will be back in effect in 2009 thanks to the bailout bill. The credit is capped at $500 per homeowner. Eligible improvements include adding energy efficient exterior doors and windows (including storm doors and windows), adding insulation, and installing energy efficient air conditioning, heating, and hot water heaters (solar water heaters are eligible for the solar investment tax credit). A full list of eligible investments and products is available on the U.S. Department of Energy's Energy Star Web site.
Solar Power Wins Big
One of the things that inhibits the growth of solar power is that up front costs are, well, costly. Those who installed such systems have been eligible for a 30 percent tax credit for most of the past decade (the credit was allowed to expire a few times only to be reenacted the following year), but that tax credit was capped at $2,000. Given that installing a PV system adequate for a typical home costs about $25,000, that "30 percent" tax credit was actually closer to 8 percent because of the cap.
The tax credit had been scheduled to expire at the end of the year, but has now been extended through 2016. It's significant that the $2,000 cap has been removed, so it finally represents a true 30 percent credit. The extension also extends the tax credit to Alternative Minimum Tax (AMT) filers, who had previously been ineligible. The removal of the $2,000 cap and eligibility of AMT filers went into effect in 2009. You are eligible for the tax credit in the year the system is "placed in service.")
Expired Credits Reinstated
Tax credits for green home improvements. that improve energy efficiency, which expired in 2007, will be back in effect in 2009 thanks to the bailout bill. The credit is capped at $500 per homeowner. Eligible improvements include adding energy efficient exterior doors and windows (including storm doors and windows), adding insulation, and installing energy efficient air conditioning, heating, and hot water heaters (solar water heaters are eligible for the solar investment tax credit). A full list of eligible investments and products is available on the U.S. Department of Energy's Energy Star Web site.