Some New “Green” Tax Credits You Might Be Able to Use

may be a very good one for those of us practicing the DON method of tax resistance.

For one thing, the Senate is currently trying to make it easier for those of us who don’t itemize to take deductions for giving money to charity (I’ll go into this in more detail if it actually becomes law).

But , I’ll pass along some more details about the new “green” tax credits you can start taking advantage of . Jeremy Faludi at WorldChanging describes these new tax breaks:

Solar tax credits, for instance, are at an all-time high for the IRS. You can deduct 30% of the cost of a residential solar installation (capped at $2,000). This includes not just photovoltaics, but solar water heaters (which are much more affordable and quite underused), solar hybrid lighting, and concentrating solar power. You get a 30% credit for fuel cell installation, too (up to $1000 per kW). There are also a slew of deductions for installing better windows, roof, and heating / AC system in your home; some of them credit you 10% of the purchase price, others are fixed dollar amounts. …And notice that these aren’t tax deductions, they’re tax credits — meaning the money comes straight off your tax burden, it’s not merely used to recalculate your tax.… In addition, many of these credits can be used twice, both by the end-user of the home or office as well as the company installing them. This is the first time individual homeowners have gotten tax breaks for efficiency and green power in 20 years — ever since Jimmy Carter’s energy bill, they’ve been commercial only.…

And these are just the federal tax breaks. Many states and local utilities or municipalities have their own incentives. For further info on state and local tax breaks, check out the Database of State Incentives for Renewable Energy (DSIRE). If you want a real-world example of how much money you could save on a project, the San Diego Regional Energy Office has a report on a PV solar installation (a big one — 30kW) that cost less than 30% of its sticker price due to all the credits and incentives. And that was when the federal credit for solar was 10%, not 30% like it is now. Forbes also has some good back-of-the-envelope numbers on what you as a homeowner might save for different situations.

A $2,000 tax credit corresponds to something on the order of $24,000 in “adjusted gross income” you can earn tax-free.

Last year, I brought in about $23,000, and my adjusted gross income was about $14,000. This year, if I spend $6,700 on some sort of home solar set-up, I could earn an additional $10,000 (which would bring my adjusted gross income up to $24,000), and end up with a nice solar system. (I’d forfeit most of my Retirement Savings Tax Credit, but I wouldn’t need it.)

Of course, if I earn an additional $10,000, I pay an additional $1,530 in FICA, which may make the whole thing not worth it from a tax-resister’s perspective*, but the prospect of having a nice solar set-up and another $1,750 or so in spending money is pretty appealing.

* FICA, otherwise known as the “payroll” or “social security” tax, is much harder to legally avoid than is the federal income tax, and this presents a problem for tax resisters like me. I’ve discussed aspects of this problem in greater detail in previous Picket Line entries, for instance: , , , , , and .