Energy Conservation

Tax subsidies for energy conservation and efficiency include the following items:

  • Tax credit and deduction for clean-fuel burning vehicles
  • Credit for construction of new energy efficient homes
  • Credit for energy efficiency improvements to existing homes
  • Credit for energy efficient appliances
  • Credit for residential energy efficient property
  • Qualified energy conservation bonds
  • Deduction for expenditures on energy-efficient commercial building property
  • Exclusion of interest on State and local government qualified private activity bonds for energy production facilities
  • Exclusion of energy conservation subsidies provided by public utilities
  • Credit for holding clean renewable energy bonds

Energy conservation and efficiency tax subsidies are provided for a number of qualifying activities, the most significant of which has been efficiency improvements to existing homes.  Under the credit, a taxpayer is able to claim 10 percent of the amount paid for efficiency improvements to residential property, limited to a maximum of  $500.  However, the current 10 percent credit replaced a 30 percent credit that was available in 2009 and 2010, which was capped at a maximum of $1,500.  This change is reflected in a sharp reduction from $4.4 billion spent on the credit in Fiscal Year 2011 to $780 million in Fiscal Year 2012.

For Fiscal Years 2009 through 2012, energy conservation and efficiency accounted for 26 percent of total tax subsidies for energy.