Energy Tax Credit

Loading the player...

DEFINITION of 'Energy Tax Credit'

An energy tax credit is given to homeowners who make their homes more energy-efficient by installing energy-efficient improvements. There are both federal energy tax incentives and state rebates. A tax credit is more valuable than an equivalent deduction because a credit reduces the tax dollar-for-dollar whereas a deduction only removes a percentage of the tax liability.

BREAKING DOWN 'Energy Tax Credit'

By researching, individuals can find several different types of energy-efficient improvements that will qualify for tax credits. For example, the American Recovery and Reinvestment Act of 2009 allowed qualified people to claim several credits such as: Home Energy Efficiency Improvement Tax Credits, Residential Renewable Energy Tax Credits and Automobile Tax Credits.

RELATED TERMS
  1. Tax Break

    A tax break is a savings on a taxpayer's liability. A tax break ...
  2. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
  3. Miscellaneous Tax Credits

    A group of less common tax credits that apply to taxpayers in ...
  4. Refundable Credit

    A tax credit that is not limited by the amount of an individual's ...
  5. American Opportunity Tax Credit

    A tax credit that enabled more student and parents to pay for ...
  6. Tax Relief

    Any program or incentive that reduces the amount of tax owed ...
Related Articles
  1. Personal Finance

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
  2. Personal Finance

    6 Tax Breaks That Anyone Can Claim

    Many can be applied to an individual’s return, and you don’t need to be a financial genius to claim them. Here are six credits or deductions that could be yours for the taking.
  3. Personal Finance

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  4. Financial Advisor

    How Going Green Can Cut Your Taxes

    Investors looking to improve their bottom line via green investing without risk should take advantage of these tax credits.
  5. Personal Finance

    Top Tax Refunds For Recent Grads

    Don't miss out on these tax credits if you have recently graduated.
  6. Personal Finance

    The Most Controversial Tax Deductions

    When it comes to taxes, it's hard to make people happy but these deductions raised more than the average amount of controversy.
  7. Personal Finance

    Top Tax Deductions Not to Overlook

    If you want to pay as little as possible in taxes, it's important to learn about all the different credits and deductions available. Here's a primer.
  8. Personal Finance

    How To Get The Most Money Back On Your Tax Return

    Many people pay more taxes than they have to simply because they don’t know better. Here are a few suggestions for getting the most out of your tax return.
  9. Personal Finance

    Top Tax Advantages of Buying a Home

    Don't forget these deductions and credits that homeowners can use to reduce their tax bill.
  10. Personal Finance

    Understanding Taxation Of Foreign Investments

    Technically, any gains from foreign investments owned by an American citizen are subject to tax by the company's home country as well as the IRS. However, the Foreign Tax Credit enables you to ...
RELATED FAQS
  1. What is the difference between a write-off and a deduction?

    Understand the differences between a tax write-off and a tax deduction. Learn how each one works to reduce income taxes and ... Read Answer >>
  2. What is the difference between a state income tax and a federal income tax?

    Learn the difference between state income tax and federal income tax based on tax rates, deductions, tax credits and taxable ... Read Answer >>
  3. How can I lower my effective tax rate without lowering my income?

    Discover how to reduce your effective tax rate without losing income by maximizing adjustments and deductions, earning tax-free ... Read Answer >>
  4. What's the difference between the marginal tax rate system and a flat tax?

    Find out about the difference between marginal tax rates and flat taxes. Gain insights on both systems and the arguments ... Read Answer >>
  5. What are some ways to minimize tax liability?

    Learn what tax strategies are available to individuals and business owners that may allow for a reduction in tax liability ... Read Answer >>
  6. What are the differences between regressive, proportional and progressive taxes?

    Understand the differences between the most common tax systems including regressive taxes, proportional taxes and progressive ... Read Answer >>
Trading Center