|Incentive Type:||Personal Exemption|
|Eligible Efficiency Technologies:||Yes; specific technologies not identified|
|Eligible Renewable/Other Technologies:||Solar Water Heat, Solar Space Heat, Photovoltaics|
|Applicable Sectors:||Residential, Multi-Family Residential|
|Amount:||100% of subsidy|
|26 USC § 136
10/24/1992 (subsequently amended)
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 solar-electric 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. This publication states: “If you are a customer of an electric utility company and you participate in the utility’s energy conservation program, you may receive on your monthly electric bill either: a reduction in the purchase price of electricity furnished to you (rate reduction), or a nonrefundable credit against the purchase price of the electricity. The amount of the rate reduction or nonrefundable credit is not included in your income.”
* 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.