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California Energy Tax Credits

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    Energy Efficient Home Modifications

    • Homeowners who install qualifying modifications -- such as energy-efficient air conditioning, geothermal heat pumps, water heaters or insulation -- may receive a tax credit worth 50 percent of the installation cost of the modification, up to $1,500. The cap on the tax credit applies to all of a taxpayer's residences, and taxpayers may not claim more than $1,500 for making adjustments to multiple homes. Until the 2010 tax year, this credit was capped at 30 percent of costs up to $1,500 and was applicable on a home-by-home basis.

    Electric Car Credit

    • Owners of a plug-in electric drive vehicle receive a California tax credit worth $2,500 the year they purchase the car and place it into service. The credit increases by $417 per every kilowatt hour of battery capacity in the vehicle above 5 kilowatt hours up to 20-kwh batteries. For example, a vehicle with a 15-kwh battery receives a tax credit worth $6,670, or $2,500 plus 10 x $417. This tax credit begins to phase out when retailers in the state sell the 200,000th plug-in vehicle.

    Solar Energy Rebates and Incentives

    • Homeowners who install a qualifying home solar-energy unit qualify for a rebate based on the size of the system installed. Most small home systems, capable of producing 100 kilowatts or less, receive a tax rebate of $2.50 per watt generated by the system in the year in which they were installed. Larger solar-energy-producing units receive an ongoing tax credit and receive 39 cents per month per kilowatt they generate for a period of five years after installation.

    Emerging Renewables Program

    • The state's emerging renewables program provides homeowners who install wind systems and fuel cells to generate their own energy with a tax credit. As originally penned, the ERP provided credits up to $500 of kilowatt hour of capacity the generator held. Beginning in March 2011, the state temporarily suspended the program, citing abuse of the credit in which homeowners were reimbursed for almost the entire cost of wind systems in areas that may not have the wind resources to drive a system. The Department of Revenue plans to modify the system and introduce limits to it, although as of June 2011, the guidelines for the credit had yet to be unveiled.

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