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Tax Credits for an Energy StarTo encourage Americans to save energy and reduce pollution,

Tax Credits for an Energy StarTo encourage Americans to save energy and reduce pollution,

Tax Credits for an Energy Star
To encourage Americans to save energy and reduce pollution, the Environmental Protection Administration (EPA) launched the “ENERGY STAR” program in 1992. Later, the Energy Department and the EPA began granting makers of appliances and building materials the familiar ENERGY STAR seal if their products met federal standards for energy efficiency. The American Recovery and Reinvestment Act of 2009 revised a program begun earlier that awards federal income-tax credits to consumers who buy these products. The stimulus package also contains funds for rebates to consumers who buy new, ENERGY STAR–qualified appliances. Each U.S. state and territory has developed its own rebate plan. Hybrid gas-electric vehicles and those using alternative fuels are eligible for tax credits, as are plug-in electric vehicles. You can also get a tax credit equivalent to 10 percent of the cost if you convert a conventional vehicle to a plug-in, electric-drive motor. In the state-administered rebate program, replacing certain appliances with qualified ones will not only get you a rebate but will also lower your utility bills. Depending on climate, geography, and other factors, your state may choose from among boilers, central or room air conditioners, washing machines, dishwashers, freezers, oil and gas furnaces, heat pumps (air source and geothermal), refrigerators, and water heaters. Certain kinds of home improvements are eligible for tax credits. You might invest in a new, qualified central air-conditioning system, heat pump, or furnace. If you live in a cold climate, you might choose to insulate or seal your windows. You might install a biomass stove that burns agricultural and wood waste, plants and residues, or wood pellets. Not only will you get a tax credit, you will also see long-run savings on your fuel bill and help protect the environment.
Questions for Critical Thinking
1. How will paying out rebates and granting tax credits stimulate the economy?
2. Which would you prefer to receive—an income-tax credit or a rebate? Why?
 
 
 
Sources: 
U.S. Department of Energy, “Consumer Energy Tax Incentives: What the American Recovery and Reinvestment Act Means to You,” http://www.energy. gov, accessed February 4, 2010; Alliance to Save Energy, “Energy-Efficient Home and Vehicle Tax Credits,” http://ase.org, accessed February 4, 2010; “Federal Tax Credits for Consumer Energy Efficiency,” http://www.energystar.gov, accessed February 4, 2010; Environmental Protection Administration, “Environmental Progress,” http://www.epa. gov, accessed February 4, 2010; U.S. Department of Energy, “Rebates for ENERGY STAR Appliances,” http://www.energysavers.gov, accessed February 4, 2010.