Can You Take an Energy Saving Refund if You Have No Taxable Income?

Some energy-saving refunds are not tied to your taxes.

Several energy-efficient appliances and products carry rebates, tax deductions or tax credits. These incentives are typically government-funded and serve to balance the cost of buying energy-efficient components which are typically more expensive than less-efficient equivalents. While some of these incentives come as purchase rebates, others come in the form of tax deductions and credits, which can fall subject to a range of limitations.

Energy Star Rebates

Many Energy Star certified products carry either point-of-purchase or mail-in rebates. These rebates are tied to the purchase price and environmental impacts of a given product and do not have any relation to your taxes. Although rebates vary from time to time, it is not uncommon to find offers for $500 toward the cost of replacing multiple kitchen appliances and $200 toward an Energy Star water heater.

Tax Credit for Efficiency Upgrades

If you make any of several energy efficiency upgrades to your home, you are eligible to claim a tax credit for 10 percent of the cost of those upgrades, up to a lifetime maximum of $500. This credit is far ranging, covering both upgrades to your home's envelope, which includes its windows, roof, door and insulation, as well as to its mechanical systems, which include both HVAC and water heater. However, according to chapter 37 of Internal Revenue Service Publication 17, this credit is not refundable. In other words, it cannot reduce your tax liability below zero and trigger a refund. This means that if you have no taxable income and, therefore, no tax due, you will not benefit from the credit.

Tax Credit for Energy Production

The IRS will also let you claim a tax credit for the cost of adding alternative energy systems to your home. The credit applies to photovoltaic solar arrays, solar hot water systems, geothermal heat pumps and small home wind turbines. Although the credit is nonrefundable, if you do have a taxable income, it can be very generous, since the credit applies to 30 percent of the cost of the system with no limits.

Electric Vehicle Tax Credit

As with the other credits, the tax credit for purchase of an electric or plug-in hybrid vehicle is not refundable, rendering it useless for an individual with no taxable income. However, if you do have a taxable income as of this article's publication, you will be able to take a $7,500 credit against the cost of an eligible vehicle such as a Nissan Leaf, Chevrolet Volt, or Tesla Roadster.

References

• EnergyStar: Special Offers and Rebates from ENERGY STAR Partners
• IRS.gov: Publication 17 (2010), Your Federal Income Tax
• EnergyStar: 2011 Federal Tax Credits for Consumer Energy Efficiency
• Fueleconomy.gov: Federal Tax Credits for Electric Vehicles
• Fueleconomy.gov: Federal Tax Credits for Plug-In Hybrids