Home and Energy Tax relief can be taken advantage of through the auspices of the Energy Incentives Act. This Act provides Tax relief to US individuals who make energy efficient home improvements. Not only will this cut your tax bill, it will also assist in lowering your utility costs. These credits can reduce your tax bill dollar for dollar and range from $50, when the home owner installs a whole-house circulating fan, to as much as $2 000 when the home owner converts a water heating system to a solar system.
Home owner upgrades in order to enjoy tax relief do not necessarily have to be expensive and sophisticated; they can also be relatively simple changes. For instance, replacing drafty doors and windows, replacement of an old air conditioning or heating unit and adding of proper insulation are all beneficial for Tax relief and can shave a few hundred dollars from your tax bill.
The only drawback of this particular form of Tax relief is that any improvements to create an energy efficient home, is that a two year total of only $500 is allowed. Although if you make use of solar water, power or heat systems you may still be able to claim a credit for these and other solar related credits.
A tax credit is different to a deduction in that it can provide very significant Tax relief savings. A deduction merely reduces the amount of gross income that is taxable, whereas a credit reduces the amount of income tax you have to pay. So a tax credit reduces the amount of tax itself.