Don't Mess With Taxes

Connecticut homeowners, take a breath. You don't have to rush to get your residential energy improvement purchases in under the sales-tax-free wire.

The state's Weatherization Sales Tax Holiday, a year-long sales and use tax exemption for purchases of energy-efficient home improvement products, was scheduled to expire at midnight this June 30. But Nutmeg State lawmakers have made the weatherization tax break permanent.

The indefinite extension is part of a new law that took effect on June 4 that also exempts the sales and use tax on Energy Star certified appliances purchased on that date and thereafter, including:

• Refrigerators and freezers 
• Clothes washers 
• Dishwashers 
• Room air conditioners 
• Dehumidifiers 
• Room air cleaner units 
• Water coolers 
• Battery chargers

Also as part of the new tax “holiday” law, no sales or use tax will be collected on compact fluorescent light bulbs. This provision applies to the energy saving bulbs purchased on June 1 or later.

Differing deadlines: While the move by Connecticut lawmakers to reward energy saving taxpayers is laudable, they, like tax writers nationwide are wont to do, have complicated it a bit, as least as far as dates for the breaks.

You probably noticed that the appliances provision took effect June 4, while the light bulb one was retroactive to a few days earlier.

State officials say that if you bought the tax-free light bulbs or Energy Star appliances on or after the effective dates and paid sales tax on the items, you can take your receipt to the retailer and get a refund of that amount.

The appliance tax break also has, at least for now, an ending date. The sales tax exemption will run on Energy Star items through June 30, 2008.

But the compact fluorescent bulb tax break, however, is permanent, just like the one for weatherization items that were exempted in the previously passed holiday. So you don't have to stock up on these items right now in order to save a few tax dollars.

For a bit more info, check out the Connecticut Department of Revenue Services press release on the Energy Star appliances break, as well as the document detailing eligible home weatherization purchases. And you can read more about Energy Star standards here.

The price of energy savings: One other thing to consider is just how much these tax breaks are going to cost the state.

Connecticut is expected to forgo about $13.5 million in sales tax during the Energy Star tax holiday. The exemption for compact fluorescent light bulbs and home weatherization products is estimated to cost the state about $7 million during fiscal year 2008.

If I were a Connecticut resident, I might be wondering and worrying a bit about how the state plans to make up that money.