Tax Credit for Whole House Gas Generators

Some states will cut you "tax slack" on sustainable sources, such as clean-burning natural gas.
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Whole-house gas generators can be lifesavers for homeowners who can afford the $10,000 to $20,000 or more it can take to have one installed. They don't generate federal energy tax credits, but tax credits of other kinds, and even reimbursements, might be available to you depending on why you need to purchase a generator, where you live and when you lived there.

Energy Tax Credits

While the federal government doesn't provide energy tax credits for gas generators -- preferring to focus instead on renewable energy sources like wind and solar -- some states do. Because natural and propane gases burn cleaner than other fossil fuels, such as oil and coal, they reduce a home's carbon footprint. And because a gas generator can run as easily on biomass methane gas mined from decomposing landfill waste and other biological sources as it can from natural gas mined using traditional underground extraction, you might be eligible for an additional non-taxable state grant, subsidy or tax credit if you choose that fuel source. Check with your state's energy and environmental authorities or an accountant to find what credits are available where you live.

Federal Tax Deductions for Medical Expenses

According to the Internal Revenue Service, If you itemize your tax deductions, you can deduct medical and dental expenses paid to prevent, mitigate, diagnose or cure a physical or mental illness. A generator purchased for medical needs is tax deductible as a medical expense as long as you, or a family member who lives with you, has a documented medical condition that could become life threatening if electrical power is lost. Depending on your age, only expenses that exceed 7.5 to 10 percent of your adjusted gross income are eligible, and you will need to provide a letter from your doctor explaining your condition when you file your tax return.

Long-term Capital Gains

Depending on the value of your home -- and depending on how many homes you've deferred capital gains taxes on by purchasing a new one within the required time frame -- you may still owe capital gains. If you sell a home and decide not to purchase another one, a whole-house generator would qualify as a capital improvement that might reduce your tax liability depending on the adjusted tax basis of your home.

Generator Reimbursements Due to Natural Disasters

The Federal Emergency Management Agency coordinates federal, state and sometimes local responses to natural disasters, many of which result in massive and lengthy electrical power outages. FEMA has a generator reimbursement program to assist homeowners affected by disasters; it's not a tax credit, but a reimbursement. It begins on the date a disaster is declared by a state governor and ends on the date power is restored. While FEMA provides grants to certain businesses for the purchase of standby generators, it doesn't do so for individuals and families. This program should allow you to receive reimbursement for the cost of a generator should a natural disaster occur where you live.

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