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Financial Education for Everyone

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January 23, 2009

One of the few bright spots in the current financial crisis is that the government has reinstated federal tax credits for a variety of energy-efficient home improvements you make in 2009. They also extended deadlines for solar energy systems and fuel cell tax credits until 2016 and established new credits for small wind-energy systems and plug-in hybrid vehicles.

This means that you can not only take advantage of many products that are good for the environment, but also can save on energy expenses while lowering your tax bill. Here are a few highlights:

Home improvements. Tax credits are available for insulation, energy-efficient replacement windows, non-solar water heaters, and certain high-efficiency heating and cooling equipment. These tax credits are not available for new home construction; however, new-housing credits are available for photovoltaic systems that convert sunlight into electricity, as well as solar water heaters, small wind energy systems and fuel cells.

Energy-efficient cars. A new tax credit is now available for plug-in hybrid cars and trucks, ranging from $2,500 to $7,500, depending on battery capacity. And, credits are still available for certain models of hybrid gasoline-electric, diesel, battery-electric, alternative fuel and fuel-cell vehicles, depending on whether their manufacturers have yet sold the eligible number of vehicles. Go to http://fueleconomy.gov for more details.

The Energy Star Website, run by the U.S. Department of Energy, contains a comprehensive table showing which products qualify for the tax credits and where to go for more information (www.energystar.gov/about/federal_tax_credits).

Even if you can't afford a new roof or hybrid car, there are still plenty of ways you can significantly lower your energy bills. For example:

  • For every degree you lower your thermostat (or raise it in the summer) you can trim your utility bill by 3 to 5 percent. Bonus points for lowering it further at bedtime.
  • Up to 30 percent of heated or cooled air can be lost through leaks, so add weather stripping around windows and doors and caulking around ducts, plumbing bypasses and other openings.
  • Heating water is the third-largest home energy expense, so try lowering your water heater temperature to 120° F or lower (provided your dishwasher's manual says that's okay).
  • Buy a programmable thermostat so you can lower the temperature when you're not home and heat things up shortly before you return. (The reverse works in summer.)
  • Buy Energy Star products, which consume up to 50 percent less energy and water than standard models. Go to www.energystar.gov for information on finding local retailers, rebates and more.
  • Use compact fluorescent lamps, which consume 75 percent less energy than incandescent bulbs, last 10 times longer and save $30 or more over the lifetime of each bulb.
  • Clean or replace furnace filters each month and dust refrigerator coils every few months to ensure more efficient operation. Also, clean the clothes dryer lint trap after each use.
  • Install tempered glass doors and a heat-air exchange system to your fireplace to re-circulate warmed air; and always close the damper when not in use.
  • Run full washer and dryer loads and use cold or warm water whenever possible.
  • Run full dishwasher loads and use the unheated drying cycle if available.
  • Turn off lights, computers, televisions and other electronic equipment when not in use.

Scaling back your energy costs is a no-brainer in these penny-pinching times – not to mention being good for the environment.


This article is intended to provide general information and should not be considered health, legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.