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Integrated Recovery Guide - Energy Tax Credits: Consumers, Businesses, and State and Local Governments Print Share

Clean Energy and Energy Efficiency Tax Credits: Consumers, Businesses, and State, Local, and Tribal Governments

 

Consumers, businesses, and state and local governments are eligible for the following tax credits and incentives for clean renewable energy and energy efficiency through the American Recovery and Reinvestment Act of 2009.  These will allow New Mexicans to reduce their energy consumption and lower their bills:

  • Plug-in Electric Drive Vehicle Credit. The bill modifies and increases a tax credit passed into law at the end of 2008 for each qualified plug-in electric drive vehicle.  The $2,500 base amount increases for vehicles powered by batteries.

  • Parity for Transit Benefits.The tax stipulation in ARRA permits employers to provide tax-free fringe benefits to employees for transit and parking, up to certain caps.  Under prior law, the cap for mass transit was $110 per month, while the benefit for parking was $230 per month.  This provision brings the mass transit cap up to $230 per month, incentivizing mass transit equally with driving.  Given the recent expansion of the New Mexico Rail Runner Express to Santa Fe, this change comes at a particularly good time for New Mexico.

  • Tax Credits for Energy-Efficient Improvements to Existing Homes.  ARRA extends through 2010 tax credits for energy-efficient improvements to existing homes.  Under prior law, individuals were allowed a tax credit equal to 10% of the cost of qualified energy efficiency improvements, capped at $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, oil furnace or hot water boiler; and $300 for any item of energy-efficient building property (such as wood pellet stoves).  ARRA increases the credit amount to 30% for 2009 and 2010 and replaces the property-by-property dollar caps with an aggregate $1,500 cap, while updating the energy-efficiency standards to qualify.

  • Removal of Dollar Limitations on Credits for Solar, Geothermal, and Small Wind Credit.  Businesses and individuals can claim a 30% tax credit for qualified small wind energy property, solar thermal property, and geothermal heat pumps.  Prior law capped the total credit amount at $2,000 for solar thermal and geothermal heat pumps (individuals), and $4,000 for small wind property (businesses).  ARRA repeals all dollar caps, so that each of these properties would be eligible for an uncapped 30% credit, whether purchased by a business or individual.  Adopting these energy-saving properties—particularly solar thermal systems, which work especially well in low-humidity places like New Mexico—could help households and businesses in the state save money and energy.

  • Clean Renewable Energy Bonds (CREB). The bill authorizes an additional $1.6 billion of new CREBs to finance facilities that generate electricity from renewable resources.  One-third of the amount is reserved for each of the following: state/local/tribal governments; public power providers; and electric cooperatives.

  • Repeal Subsidized Energy Financing Limitation on the Investment Tax Credit.Prior law reduced the investment tax credit if property was also financed with industrial development bonds or through any other Federal, State, or local subsidized financing program.  ARRA repeals this limitation, ensuring that forward-thinking states like New Mexico have greater incentives to maintain clean energy financing programs.