Tax Credit Incentives for Energy-Saving Homes & Vehicles

With fuel and other energy costs skyrocketing last year, consumers who purchased energy-efficient home improvements or hybrid vehicles can take a tax credit — one of the tax code's biggest prizes.

Credits amount to pure gold for the taxpayer because they are a dollar-for-dollar reduction in tax liability, whereas a tax deduction only reduces the income against which tax is assessed.

Many home improvements can qualify for the residential energy credit, including insulation, certain water heaters, air conditioners, fans, furnaces, skylights, exterior windows and doors, solar panels and metal roofs with pigmented coatings designed to reduce a home's heat gain.