Lower Your Taxes by Thinking Green
Outfitting your home with new storm doors and windows or buying a gas-efficient hybrid car can help you score tax credits.

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.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

-
What About Those ‘Guaranteed’ Life Insurance Ads?
Guaranteed life insurance policies can sound tempting if you've been declined for insurance elsewhere. Here are four downsides and one alternative.
-
13 Answers to Pressing Social Security Questions
From smart claiming strategies for couples to tips on maximizing your monthly check, we have advice that can help you.
-
2025 SALT Cap Could Hurt Top 'Hidden Home Cost'
Tax Deductions The latest GOP tax bill might make hidden homeowner costs worse for you. Here’s how.
-
No Social Security Tax Cuts in Trump’s 'Big Bill'? What Retirees Need to Know
Tax Policy Eliminating taxes on Social Security benefits is missing from President Trump’s proposed tax overhaul. Here’s why and what an alternative offering could mean for retirement taxes.
-
Retire in the Bahamas With These Three Tax Benefits
Retirement 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 Know
Tax Policy Senate Republicans released proposed tax changes for Trump’s ‘one big, beautiful bill.” Some provisions are already stirring debate.
-
Senate Seeks $6,000 'Bonus' Tax Deduction for Those Age 65 and Older
Tax Reform Under Trump’s ‘big bill,’ the Senate Finance Committee has proposed a larger bonus tax deduction for older adults than the House. Will it pass?
-
2025 Virginia Tax Rebate Checks Coming Soon? What to Know Now
Tax Rebates Given a historic 2025 gubernatorial race, tax policy will remain a key issue for Virginians in the months ahead.
-
Don't Miss These Four Tax Breaks for Americans Living Abroad in 2025
International Tax U.S. expats can reduce their tax burden by taking advantage of a handful of tax credits and deductions.
-
Summer Backyard Ideas With Added Tax Benefits for 2025
Tax Tips Find out how these summer 2025 home projects can help you save on taxes next year.