To your credit, you've practiced energy conservation and just purchased energy efficient windows and insulation for your house. You can transform this into an energy tax credit on your income tax. This is a true tax credit not just a deduction, in other words you can take a reduction (credit) on your taxable income.
President Bush's Energy Policy Act of 2005 was designed to encourage energy efficient fuels, cars, and heating and cooling sources. This act makes this a good time to purchase a new furnace, air conditioner, or energy efficient car, for example, because you can save twice. You can save on your income tax, and also on your energy bills.
You can take a tax credit on:
* Home improvements: windows, high efficiency heating and cooling devices, metal roofs, heat pumps and boilers
* Efficient cars: gas and electric, diesel, alternative fuel and fuel cells
* Solar energy: solar heaters and photovoltaic systems
* Fuel cells
Diesel and hybrid car energy tax credits will start to phase out after the manufacturer sells 60,000 vehicles or end for cars in service after Dec. 31, 2010. Tax credit amounts for other energy saving devices are subject to various restrictions, generally based on energy savings. So conserve energy, save money on your energy bills, and take advantage of the 2006 Federal energy tax credit. If you have purchased energy efficient cars or heating/cooling devices make sure you claim this credit on your income tax.
The business that you purchased the appliance or unit from will have data on eligibility. If you haven't, this may be a good time to replace that old furnace or air conditioner, or do some energy efficient home improvements, or get a new qualifying car. It will be to your credit!
