ABOUT ENERGY STAR PARTNER RESOURCES

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I am getting a rebate and a tax credit for an energy efficient product I purchased. Do I have to subtract my rebate first before I calculate my tax credit? Follow

It depends on who is giving the rebate: Utility Rebate If your rebate is from your utility (even a government-run utility) then the rebate must be subtracted prior to determining the applicable amount for your tax credit. Source: Section 136(b): The adjusted basis of any property shall be reduced by the amount excluded under subsection (a) which was provided with respect to such property. State or Local Government Rebate: The IRS has not issued guidance on how these federal tax credits will interact with State or local rebates. However, in the past, it has worked like this: If your state/local rebate was taxable (you got a 1099 tax form and it was considered taxable income), then you did not have to subtract the rebate amount from the total cost of your new energy efficient property. So, you got the 30% tax credit on the entire cost, but you had to pay taxes on the local rebate. Or, if your state/local utility rebate was not taxable, then you did have to subtract the rebate amount from the total cost before you figured out your 30% federal tax credit.

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