Introduction
Between 1970 and 1998, global energy use rose by about
70 percent, and demand for energy continues to rise at a
rate of about two percent each year.(1)
While energy use and resource extraction fuel the global
economy and development worldwide, they pose a serious environmental
hazard. Increases in energy use mean parallel increases
in emissions, including greenhouse gasses, which mean more
smog, more global warming effects, and more risks to human
and environmental health.
Simple things, such as kitchen appliances and light bulbs,
may seem small, but they can make a big difference in global
energy use. In addition, several small insulation and weatherization
projects can reduce the heat and cooling requirements of
a home or office by as much as 30%.(2)
The federal government has long utilized federal laws and
executive orders to increase energy efficiency standards
in federal buildings. Today, all U.S. federal agencies are
required to use 30% less energy per square foot in their
buildings than they did in 1985, and 35% less by 2010. To
meet these goals, such facilities are using a variety of
methods, including energy-efficient lights and appliances,
and are required to purchase ENERGY STAR® appliances
or those that are in the top efficiency bracket where no
label exists. ENERGY STAR® and equivalent appliances use
an average of 10-50% less energy and water than standard
models – offering the consumer financial savings while decreasing
their environmental impact.(3)
Government-issued tax credits and tax exemptions are a
cost-effective way to encourage the use of energy-efficient
home and office appliances that may initially cost more
than their traditional counterparts, or promote home efficiency
improvements such as duct and insulation upgrades. Tax incentive
programs have a great track record of stimulating consumer
demand and, in turn, increasing supply while reducing upfront
costs.
Overview of Existing State Tax Incentive Programs
Many states have low-interest loan programs
available to help residents finance energy efficiency upgrades.
For a comprehensive listing of state loan programs for energy
efficiency, visit the North American Insulation Manufacturers
Association’s (NAIMA) page on Insulation
Incentives.
Arizona
Arizona
Revised Statutes 43-1031 - Arizona’s income tax subtraction
for constructing an energy-efficient home is a small state
income tax credit. The homeowner is allowed an income tax
deduction of 5% of purchase price (up to $5,000), if the
residence is certified to be 50% more energy efficient than
the 1995 model energy code (MEC) at closing. The average
tax saving is $190. Arizona employs the Home Energy Ratings
System (HERS) for certification of potential savings. Ninety
HERS points are required to qualify for 50% above the 1995
model energy code. The Arizona Department of Commerce’s
Energy Office will adjust the eligibility criteria should
the number of residences that qualify be larger than 5%
of the total number of residences sold. The credit is available
for new homes built before December 2010.
Idaho
Idaho
Statutes 63-3022B - Idaho offers income tax deductions
to residents for installation of insulation and alternative
energy systems. Homeowners receive a deduction for the cost
of insulation, storm doors, caulking, and weather stripping.
In the first year of operation of qualifying installations,
40% of the cost (up to $5,000) may be deducted. For the
3 years after installation, 20% of the costs (up to $5,000
a year) may be deducted. Participation is low due to low
tax rates in Idaho – the maximum value of the deduction
to the taxpayer is $390.
Maryland
Maryland exempts highly energy-efficient (mostly ENERGY
STAR®) air conditioners and refrigerators from the state
sales tax. The tax credit is only one in a state program
to improve energy efficiency and promote the use of clean
energy, all enacted in 2000 by the Maryland Clean Energy
Incentive Act (HB20).
Minnesota
Minnesota
§ 297A.67, Subdivision 29 - Energy-efficient products,
including photovoltaic devices, are exempted from the state
sales tax via the state’s Energy Efficiency Sales Tax Exemption.
Under the statute, the following products are exempted from
the state sales tax: residential lighting fixtures and compact
fluorescent bulbs that carry the ENERGY STAR® label; electric
heat pump hot water heaters that meet certain efficiency
criteria; natural gas hot water heaters that meet certain
efficiency criteria; and, photovoltaic devices and natural
gas furnaces that meet certain efficiency criteria.
Montana
Montana
Code Annotated 15-32-109 - Montana homeowners are eligible
for a tax credit for a portion of the costs of installing
additional insulation, caulking materials, or other measures
that reduce energy use and lower utility bills. The amount
of the tax credit is 25% of the investments made to improve
home energy efficiency.
Oregon
Oregon’s Residential
Energy Tax Credit offers a tax credit ranging from $30
to $180 on premium energy-efficient dishwashers, clothes
washers, and refrigerators. The model of the appliance must
be included in the Oregon Department of Energy’s list
of qualifying appliances, and the amount of the tax credit
is based on the amount of energy saved compared to standard
models.
Introduced Legislation
Florida
HB
1467 / SB 2724, introduced 3/3/04, exempts all the following
from sales and use taxes: dishwashers, clothes washers,
ceiling fans, refrigerators, room air conditioning units,
central air conditioners, dehumidifiers, programmable thermostats,
lighting fixtures, or compact fluorescent light bulbs that
are certified by the U.S. Department of Energy as meeting
or exceeding energy-saving efficiency requirements and designated
as meeting or exceeding such requirements under the agency’s
ENERGY STAR® program.
Status: Died in Committee on Finance & Tax 4/30/04.
Georgia
HB
361, introduced 2/12/03, exempts any dishwasher, clothes
washer, ceiling fan, or refrigerator from state sales and
use taxes, if it is certified by the U.S. Environmental
Protection Agency as meeting or exceeding the energy efficiency
requirements under the ENERGY STAR® program.
Status: To House Committee on Ways and Means 2/12/03.
HB
564, introduced 2/26/03, would allow an income tax credit
for the purchase of a qualified premium energy-efficient
appliance for use in the taxpayer’s residence and would
provide that the Environmental Protection Division of the
Department of Natural Resources develop standards for and
certify qualified premium energy-efficient appliances.
Status: To House Committee on Ways and Means 2/26/03.
Massachusetts
H
631, introduced 1/1/03, would exempt energy-efficient
appliances from the state sales tax.
Status: The residue from Joint Committee on Taxation: Accompanied
a Study Order H 4651, 4/12/04.
H
4647, introduced 4/8/04, would add the following language
to state law: “Energy-efficient activities shall also include
a program to provide consumers with a rebate at the time
of purchase of 5% of the purchase price for clothes washers,
refrigerators, or dishwashers, which meet or exceed applicable
energy savings requirements developed by the U.S. Department
of Energy for the ENERGY STAR® program.”
Status: In House, ordered to third reading 5/10/04.
Michigan
HB
5910, introduced 5/13/04, would exempt the sale of ENERGY
STAR®-qualified clothes washers, refrigerators, room air
conditioners, lighting fixtures, fluorescent light bulbs,
ceiling fans, and torchiere lamps from sales tax.
Status: To House Committee on Energy and Technology 5/13/04.
Pennsylvania
HB
2628, introduced 5/19/04, would provide for exclusion
from sales tax for a clothes washer, dehumidifier, dishwasher,
refrigerator, freezer, room air conditioner, ceiling fan,
programmable thermostat, ventilating fan, compact fluorescent
bulb and residential light fixture, provided such property
qualifies as an ENERGY STAR® product.
Status: Referred to House Committee on Finance 5/24/04.
HB
2370, introduced 2/13/04, would provide tax incentives
for the purchase of energy-efficient appliances.
Status: Re-committed to House Committee on Rules 6/16/04.
Virginia
HB 1279, introduced 1/16/04, would grant a sales and use
tax exemption for certain energy-efficient products that
have been awarded the ENERGY STAR® certification mark based
on requirements developed by the U.S. Environmental Protection
Agency and the U.S. Department of Energy.
Status: Continued to 2005 in House Committee on Finance
2/11/04.
|
