Wind energy is one of the most cost effective energy sources.
Investing in alternative energy for your home is an effective way to lower your energy costs and receive government tax benefits. While the incentives are reason enough to consider it, it makes sense to find ways to save money. According to a 2008 report from the Center for American Progress, energy costs make up a significant portion of Americans' monthly expenses, with low-income families paying up to 20 percent for heating oil in fiscal year 2006. The continued dependence on fossil fuels for energy will mean persistent increases in home energy costs. Wind and solar power offer reasonable alternatives.
Federal Tax Credits for Consumer Energy Efficiency
Under the Federal Tax Credits for Consumer Energy Efficiency program, individuals can qualify for tax credits for up to 30 percent of the cost of installing residential small wind turbines or a solar energy system. The latter includes solar panels or solar water heaters. There is no upper limit to the tax benefit. Therefore, consumers can invest in the most efficient equipment for their energy needs. The credit applies to units placed into service in 2009. Consumers should keep all their receipts and obtain a Manufacturer's Certification Statement. This certification is available from the manufacturer of your equipment. It is a testament to the fact that your purchase qualifies for the tax credit.
Production Tax Credit
The Production Tax Credit is available for consumers using wind energy as a source of electricity, with an income tax credit of 2.1 cents/kilowatt-hour. For the average home, energy consumption averages 10,000 kilowatt-hours per year. A 10-kW wind turbine could fulfill the annual energy needs for a typical household. The Production Tax Credit then, provides significant tax savings for the consumer.
State Production Tax Credits
Following the lead of the federal government, a few states such as Iowa have their own Production Tax Credit program in place. The Iowa Wind Energy Production Tax Credit provides 1 cent per kilowatt-hour of electricity of state income tax credit. There is no minimum size required for the wind turbine; however, approval by the county board of supervisors is required. The incentive program has an upper limit on monies allocated for funding.
Modified Accelerated Cost- Recovery System
The Modified Accelerated Cost-Recovery System depreciation method is a federal tax program which allows businesses to declare the depreciation of equipment for wind projects. Some states have similar programs. If you are a business which uses wind power for business purposes, consult your tax professional to see which tax incentives you may qualify for.
