Going Green Can Save You Green


The federal government has made that easier for businesses with special energy-savings tax breaks designed to lower your energy costs and build your bottom line.How do you get more out of less? That’s the question every successful business owner must ask in today’s economy. One way to accomplish it is to reduce costs – in particular, the rising cost of energy. The federal government has made that easier for businesses with special energy-savings tax breaks designed to lower your energy costs and build your bottom line.

According to the Small Business Administration (SBA), these incentives include:

Tax deductions for commercial buildings

A tax deduction of up to $1.80 per square foot is available to owners or designers of new or existing commercial buildings that save at least 50 percent of the heating and cooling energy of a building that meets ASHRAE Standard 90.1-2001. In addition, partial deductions of up to $0.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems. The credits are available for systems “placed in service” from January 1, 2006, through December 31, 2008.

Tax credits for manufacturers

If your business manufactures energy-efficient appliances, such as washing machines, dishwashers or refrigerators, you can take advantage of valuable tax breaks. You could pass these savings along to your customers, giving you a valuable competitive advantage. Please note that qualifying dishwashers and clothes washers must meet ENERGY STAR’s 2007 specification in order to qualify.

Tax credits for home builders

If you are in the home construction business, you may be able to take advantage of energy tax credits if you construct energy-efficient new homes in accordance with the Energy Policy Act of 2005:

  • Home builders are eligible for a $2,000 tax credit for a new energy-efficient home that achieves 50 percent energy savings for heating and cooling over the 2004 International Energy Conservation Code (IECC) and supplements. At least one-fifth of the energy savings must come from building envelope improvements. This credit also applies to contractors of manufactured homes conforming to Federal Manufactured Home Construction and Safety Standards.
  • There is also a $1,000 tax credit to the producer of a new manufactured home achieving 30 percent energy savings for heating and cooling over the 2004 IECC and supplements (at least one-third of the savings must come from building envelope improvements), or a manufactured home meeting the requirements established by the EPA under the ENERGY STAR program.

Please note that these tax credits apply to new homes located in the United States that had construction substantially completed after August 8, 2005, and that were acquired from the eligible contractor for use as a residence from January 1, 2006, through December 31, 2008.

For more information on these tax breaks, speak to your tax advisor or visit IRS.gov.

 

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