Record-high gasoline prices earlier this year and concerns about heating fuel costs this winter may have you thinking about outfitting your home with new storm doors and windows or buying a gas-efficient hybrid car. If you install qualified home improvements by December 31, you can claim an energy tax credit for 2006 worth 10% of the cost up to $5,000, resulting in a maximum tax credit of $500.
Among the improvements covered are 10% of the cost of installing insulation, energy-efficient windows, doors, skylights and metal roofs coated with heat-reducing pigment. But only $200 of your $500 lifetime maximum credit can be allocated to replacement windows.
The energy credits are more valuable than a deduction because they reduce your tax bill (or boosts your refund) dollar-for-dollar, rather than merely reducing the amount of income that is taxable. And you can claim the credit regardless of your income level.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Also, if you bought a hybrid car or truck this year, you qualify for a tax credit ranging from $250 to $2,600, depending on the make and model. However, the tax credit for some of the most popular fuel-efficient vehicles -- the Toyota Prius, Toyota Highlander Hybrid and the Lexus RX 400h -- has already been cut in half now that the manufacturers have sold their initial 60,000 vehicle allotment. Credits for qualifying Toyota and Lexus hybrids now range from $1,100 to $1,575.
The energy tax credits for cars and home improvements are also available in 2007. Check www.energytaxincentives.org for details.
-
Best Home Rental Websites and Apps 2025The best home rental websites and apps, such as Rent.com, Apartment Guide, Airbnb and Vrbo, can make finding a home or vacation rental a whole lot easier.
-
Stock Market Today: Markets Chop Up More Trump ThreatsStocks are grinding to new highs on light summer volume, and bitcoin is only getting bigger.
-
‘I Play Pickleball in Retirement.’ Is It HSA-Eligible?Retirement Tax Staying active after you retire may be easier with these HSA expenses. But there’s a big catch.
-
Mississippi Tax-Free Weekend 2025Tax Holiday Just in time for Prime Day, Mississippi celebrated a tax holiday in July. Find out what back-to-school essentials were included.
-
Ten Cheapest Places to Live in VirginiaProperty Taxes The Commonwealth of Virginia has some cheap places to live. Here are a few if you hate paying property taxes.
-
Elon Musk and Most Taxpayers Don't Like What's in Trump's 'Big Beautiful Bill'Tax Policy President Trump is betting big on his newest tax cuts, signed into law on July 4. But not everyone is on board.
-
2025 SALT Cap Could Hurt Top 'Hidden Home Cost'Tax Deductions The GOP tax bill could make hidden homeowner costs worse for you. Here’s how.
-
No Social Security Tax Changes in Trump’s 'Big Bill'? What Retirees Need to KnowTax Policy Eliminating taxes on Social Security benefits is missing from President Trump’s tax overhaul. Here’s why and what an alternative offering could mean for retirement taxes.
-
Retire in the Bahamas With These Three Tax BenefitsRetirement Taxes Retirement in the Bahamas may be worth considering for high-net-worth individuals who hate paying taxes on income and capital gains.
-
Five Surprising GOP Senate Bill Tax Changes to KnowTax Policy Senate Republicans proposed tax changes for Trump’s ‘one big, beautiful bill.” Some provisions have stirred debate.
