simple + green

Yahoo Finance has listed a couple of Green tax breaks to keep in mind when filing taxes this year.

As I posted over a month ago, there are a number of Green tax breaks that ended at the end of 2007. Most of those center around energy-efficient home improvements.

Home energy and tax savings
A carryover tax break from 2006 might be able to help cut your 2007 tax bill, too.

The Energy Tax Incentives Act of 2005 offers taxpayers a tax credit for making energy-efficient home improvements. Credits, which reduce your tax bill dollar for dollar, range from $50 for the installation of a whole-house circulating fan to $2,000 for conversion to a solar water-heating system.

Relatively simple upgrades, such as replacing drafty windows and doors, adding insulation and replacing an old heating or air conditioning unit will allow you to shave several hundred dollars off your tax bill.

The one drawback to this tax break, which expired at the end of 2007, is that any energy-efficient home improvements you made last year must be combined with any you made in 2006. And the two-year total allowed is only $500.

“It came into effect in 2006,” says Hodson, “so if you took the full credit then there’s nothing left.”

You can, however, claim more generous credits if you added solar water, heat or power systems to your house last year. And solar-related credits continue for 2008.

If you bought a hybrid car or truck last year, you may be in for a tax credit. But make sure that your particular make and model qualify:

Fuel-efficient auto tax savings

Another continuing credit for energy conscious taxpayers is the one allowed for hybrid vehicles. Tax credits, depending on the make and model of the vehicle, range from a couple hundred dollars to several thousand.

However, the credit phases out for the fuel-efficient vehicles once a carmaker sells 60,000 hybrids; eventually the credits are completely eliminated.

That happened to Toyota in 2007, meaning you’ll need to pay attention to when you bought your vehicle to determine your precise tax savings. If you purchased a Toyota or one of its Lexus model hybrids after Oct. 1, 2007, you get no tax credit.

The tax break for qualifying automakers continues through 2010, but the credit amounts will be reduced for some vehicles. Honda credits, for example, were cut in half Jan. 1.

I think it’s ridiculous that the government is cutting these tax credits. Eliminating incentives to consumers making conscientious upgrades and purchases makes no sense. Not to mention it isn’t doing much to promote Green causes, energy efficiency or alternative energy.

If anyone has insight as to how the government benefits from this decision, I’d like to know!