Legislative Update on Federal Energy Efficiency Tax Incentives

In December, 2007 legislation passed the U.S. House of Representatives to extend several of the Energy Efficiency Tax Incentives.  The provision fell one vote short of the 60 required to end a filibuster in the Senate.  The provision had broad support, but there was opposition to the mechanism proposed to pay for these tax incentives (rescinding a tax break for large oil companies).  In February 2008, the House again passed legislation, making a few modifications from its earlier bill. 

The provision passed by the House in 2008 includes:

• An extension of the commercial buildings tax deduction to the end of 2013.
• A one-year extension of the tax credit for efficient furnaces, boilers, air conditioners, water heaters and insulation and window upgrades to existing homes (covering improvements installed in 2008).
• Three-years of manufacturer tax credits for sales of high-efficiency refrigerators, clothes washers, dishwashers, and dehumidifiers (2008-2010).
• An extension of the tax credit for residential solar systems and addition of a residential wind energy credit to the end of 2014.
• A new tax credit for plug-in hybrid vehicles purchased starting in 2008 and extending until caps on the number of qualifying vehicles are reached.
• An extension of fuel cell and microturbine credits to the end of 2016.

Discussions are now proceeding in the Senate on what modifications to make to the House bill, and how to pay for these changes (finding revenues to offset the cost of these incentives).  For example, based on past actions of the Senate Finance Committee, we would expect them to add an extension of the tax credit for efficient new homes.  The amount of revenue “offsets” the Senate finds could also affect the size of the Senate package; if offsets are small, some of the extensions could be for shorter periods of time.  Of course, Senate action is not guaranteed.  Check this webpage for regular updates.

Additional Activities

• Other Potential Federal Legislation
  Although language to extend the incentives set forth in the Energy Policy Act of 2005 did not make it into the final 2007 energy bill, Congress may take up this issue again in 2008-2009.


• Tax Incentives Awareness Project
  The Tax Incentives Assistance Project (TIAP), sponsored by a coalition of public interest nonprofit groups, government agencies, and other organizations in the energy efficiency field, is designed to give consumers and businesses information they need to make use of the federal income tax incentives for energy efficient products and technologies passed by Congress as part of the Energy Policy Act of 2005.


• Federal Energy Policy Act of 2005
  

ACEEE Technical Reports

• Tax Incentives
• Energy Policy Legislation
  • Energy Policy Act of 2005

Additional Resources and Links

• Summary of Energy Efficiency Tax Incentives in the Energy Policy Act of 2005 (31 KB)
• EPAct 2005 Light-Duty Hybrid and Diesel Vehicle Tax Credit Summary (ACEEE)
• Database of State Incentives for Renewables and Efficiency
• Tax Credits for Energy-Efficient Technologies: Spurring Adoption of Cost-Effective Innovation (ACEEE Fact Sheet)
• Tax Incentives for Advanced Energy-Efficient Technologies: Costs, Benefits, and Legislative Recommendations (ACEEE Fact Sheet)
• DOE's Tax Incentive Information
  

Last Updated 3/20/08

For more information contact:
Steven Nadel, Executive Director
Suzanne Watson, Policy Director

Top of Page