CONSERVATION CORNER
Energy Bill Has Beneficial Tax Breaks
by James L. Cummins

President George W. Bush recently signed the Energy Bill passed by the United States Congress into law. It is the first major overhaul of the nation's energy policies in 13 years.

First, it adds a month to daylight saving time starting in 2007. Sponsors of the legislation say extending daylight time from the second Sunday in March to the first Sunday in November will save 1 percent on household energy bills.

Homeowners should see almost $800 million in home energy tax breaks during the next two years, with another $874 million earmarked for drivers who buy alternative fuel vehicles. Here's what the typical taxpayer could see from the energy bill.

Taxpayers can claim tax credits totaling $500 in 2006 and 2007 on existing homes to upgrade heating systems, insulation, windows, doors and thermostats, caulk leaks and install pigmented metal roofs. Write offs for replacement windows are capped at $200, however, while the credit for high efficiency central air conditioning, heat pumps and water heaters is capped at $300. Homeowners who install solar energy systems can claim a tax credit of up to $2,000 as long as the system isn't used to heat swimming pools and hot tubs. Smaller credits are available for fuel cell and photovoltaic power sources.

Contractors who build new, energy efficient houses can claim a new tax credit worth up to $2,000 for homes that are substantially complete starting the day Bush signed the bill.

Taxpayers considering an alternative fuel vehicle stand to reap tax credits worth thousands of dollars, depending on vehicle weight, fuel source and efficiency. The dollar for dollar credits are more generous than the current tax deduction allowed only for hybrid vehicles. Fuel cell powered vehicles weighing less than 8,500 pounds qualify for a base credit of $8,000, with heavier vehicles getting larger credits. Fuel cell credits are available for vehicles bought through 2014.

Hybrid vehicles bought through 2010 that use both gasoline and electricity qualify for tax credits worth between $400 and $2,400, based on a sliding scale geared to energy efficiency for cars and light trucks weighing less than 8,500 pounds. Alternative fuel vehicles powered by compressed or liquefied natural gas, hydrogen or any liquid fuel that's at least 85 percent methanol qualify for a tax credit.

The current tax credit for electric cars and vehicles powered by rechargeable batteries, worth up to $4,000, is extended past 2006, when it was scheduled to expire.

Separately, alternative fuels are entitled to a 50 cents a gallon tax credit, effective September 30. This tax break is expected to cost $44 million over 10 years and is in addition to the energy bill's hybrid car tax breaks.

James L. Cummins is Executive Director of the Mississippi Fish and Wildlife Foundation in Stoneville, Mississippi. Known as "Wildlife Mississippi," the Foundation is a non-profit, conservation organization founded to conserve, restore and enhance fish, wildlife and plant resources throughout Mississippi. Their web site is www.wildlifemiss.org.