The U.S. government offers a substantial federal tax credit to help promote the adoption of renewable energy technologies.  Federal tax credits exist for the following renewable energy technologies:

1. Solar Electricity / Photovoltaic (PV) Systems;
2. Solar Water Heat;
3. Wind;
4. Fuel Cells;
5. Geothermal Heat Pumps; and
6. Other Solar Electric Technologies

In addition, the tax credit applies to a number of common household appliances so before you purchase any of the following make sure your purchase qualifies for the tax credit:

1. Water Heaters;
2. Furnaces;
3. Boilers;
4. Heat pumps;
5. Central Air Conditioners;
6. Building Insulation;
7. Windows; and
8. Doors

Through the Investment Tax Credit (ITC), the federal government allows you to deduct 30% of your system costs off your federal taxes through a tax credit. For those individuals or businesses that invest in renewable energy technologies, the ITC allows you to recapture the cost of your investment through the tax credit by directly reducing your federal income tax liability. The ITC is the U.S. principal mechanism to help incentivize clean energy adoption and it is effective through December 31, 2016. Key provisions of the bill include:

• 30% tax credit on solar energy systems through 12/31/2016;
• No maximum dollar amount on the amount of tax credit for solar electric, solar water heaters, wind turbines or geothermal heat pumps placed in service after 12/31/2008;
• Maximum tax credit incentive of $500 per 0.5kW for fuel cells:
• Ability to offset AMT liability (you get credit even if you pay AMT); and
• Ability to carry unused credits into the next tax year.

The federal tax incentives are similar for businesses, but we suggest discussing the business ramifications with a qualified tax accountant. Please note that if you receive a state rebate, the rebate amount will be deducted from the basis in which your ITC tax credit is calculated.