When you purchase new appliances, you can receive tax incentives and other benefits if those appliances meet certain conditions. The incentives available to you underwent significant change in 2009 and further changes are expected to occur in the future as Congress tries to balance the growing budget deficit with the need to stimulate the economy and promote energy efficiency. Therefore, keeping track of what credits and deductions are available can be difficult. Fortunately, there are some general guidelines to help you.
Federal Tax Incentives
The 2005 Energy Policy Act provides some tax benefits to those who purchase certain appliances. The benefits, though, do not include tax deductions. Instead, they are tax credits, which are more valuable because they provide dollar-for-dollar reimbursement rather than a reduction in the amount of taxable income. Certain energy-efficient central air conditioning systems qualify for a tax credit of 30 percent of the cost of purchase and installation. Some water heater purchases are also eligible for tax credits. Appliances not covered include dishwashers, clothes washers and dryers, ovens and refrigerators.
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Some new, federally-funded and state-administered programs do provide incentives for those who purchase new stoves, refrigerators, washing machines, dryers and dishwashers identified as Energy Star appliances. Rather than tax deductions or credits, buyers receive rebate checks by mail for qualified purchases. The Dept. of Energy has approved a variety of state rebate plans. The programs are paid by states with federal funds provided through the American Reinvestment and Recovery Act.
State Tax Incentives
In addition to new rebate programs, several states also offer tax deductions, credits and other incentives for individuals who purchase certain appliances. In Maryland, the state exempts purchases of energy-efficient air conditioners and refrigerators from the state sales tax. In Oregon, the Residential Energy Tax Credit program provides a tax credit ranging from $30 to $180 on the purchase of energy-efficient dishwashers, washing machines and refrigerators. For more information, visit the EnergyStar.gov website.
In addition to tax deductions for the purchase of new appliances, you can deduct amounts from your income taxes for appliances donated to charities. If you donate your used appliances when you replace them, you can deduct the fair market value of those items. According to BankRate.com, a typical used TV nets a $75 to $225 deduction. Other more valuable appliances could earn you a greater deduction. If you donate used appliances, be sure to obtain a receipt for your donation. You will need that to verify your deduction claim if the Internal Revenue Service audits your return.