Residential Energy Conservation Subsidy Exclusion (Personal) (Federal)

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Summary

Last modified on February 12, 2015.

Financial Incentive Program

Place United States

Name Residential Energy Conservation Subsidy Exclusion (Personal)
Incentive Type Personal Exemption
Applicable Sector Residential, Multi-Family Residential
Eligible Technologies Solar Water Heat, Solar Space Heat, Photovoltaics, Yes; specific technologies not identified
Active Incentive Yes

Implementing Sector Federal
Energy Category Renewable Energy Incentive Programs, Energy Efficiency Incentive Programs
Amount 100% of subsidy


























Program Administrator U.S. Internal Revenue Service
Website http://www.irs.gov/publications/p525/index.html
Date added to DSIRE 2002-03-05
Last DSIRE Review 2014-10-06



References DSIREDatabase of State Incentives for Renewables and Efficiency[1]


Summary

According to Section 136 of the U.S. Code, energy conservation subsidies provided (directly or indirectly) to customers by public utilities* are non-taxable. This exclusion does not apply to electricity-generating systems registered as "qualifying facilities" under the Public Utility Regulatory Policies Act of 1978 (PURPA). If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of claiming the deduction or tax credit must be reduced by the value of the energy conservation subsidy (i.e., a taxpayer may not claim a tax credit for an expense that the taxpayer ultimately did not pay).


The term "energy conservation measure" includes installations or modifications primarily designed to reduce consumption of electricity or natural gas, or to improve the management of energy demand. Eligible dwelling units include houses, apartments, condominiums, mobile homes, boats and similar properties. If a building or structure contains both dwelling units and other units, any subsidy must be properly allocated.


The definition of "energy conservation measure" implies that utility rebates for residential solar-thermal projects and photovoltaic (PV) systems may be non-taxable. However, the IRS has not ruled definitively on this issue. Taxpayers considering using this provision for a renewable energy system should discuss the details of the project with a tax professional. Other types of utility subsidies that may come in the form of credits or reduced rates might also be non-taxable, according to IRS Publication 525.


* The term "public utility" is defined as an entity "engaged in the sale of electricity or natural gas to residential, commercial, or industrial customers for use by such customers." The term includes federal, state and local government entities.


Incentive Contact

Contact Name Public Information - IRS
Department U.S. Internal Revenue Service

Address 1111 Constitution Avenue, N.W.

Place Washington, District of Columbia
Zip/Postal Code 20224
Phone (800) 829-1040



Website http://www.irs.gov
     
     

Authorities (Please contact the if there are any file problems.)

Authority 1: 26 USC § 136
Date Effective 1993-01-01
Date Enacted 10/24/1992 (subsequently amended)



















  • Incentive and policy data are reviewed and approved by the N.C. Solar Center's DSIRE project staff.[1]

References

  1. 1.0 1.1  "Database of State Incentives for Renewables and Efficiency"