There are some tax credits in the energy bill for consumer who buy energy-efficient products or renewable energy systems, according to a recent Wall Street Journal article. Meager as the credits may be, they should help companies selling these products.

Tax credits are a stronger incentive than tax deductions, because credits reduce an individual's tax bill, dollar for dollar. That makes the energy-conscious improvements more affordable.

Energy-saving home improvements
Energy-efficient doors and windows can qualify for a credit equal to 10 percent of the cost, including installation. The cap for the credit is US$200.

An energy-efficient air conditioner, heat pump, or water heater installation can earn a credit of up to $300. A homeowner can claim up to $150 for installing a more efficient heating system that uses gas, propane, or oil. Even a circulating fan can qualify for a $50 credit.

Brian Castelli, EVP of the Alliance to Save Energy, told WSJ that the savings from installing efficient appliances can easily exceed the amount of the tax credits. Energy Star appliances have been certified to be in the top quartile of their category for efficiency.

Solar and hydrogen power
Homeowners can take as a tax credit 30 percent of the cost of solar panels or a solar water heater, including installation labor. The credit is capped at $2,000.

A fuel-cell combined heat and power system can qualify for as much as a dollar a watt, or 30 percent of the cost.

Marketing tips
Don't run out and promote the credits on the purchase of these improvements before the end of 2005. The improvements must be made in 2006 or 2007 to qualify.

Let the IRS work out the details, and make sure the credits apply to your products in a given application. For example, pools and hot tubs do not qualify for the hot water related incentives.

Remember that only the homeowner, not the vendor or installer, can take the tax credit. Be sure your advertising claims go through accounting, as well as legal, approvals.

Wall Street Journal August 7, 2005 Kelly Spors