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Michigan tax tidbit: energy credits

Michigan flag Michigan is home to Detroit, base of the U.S. auto industry. While that city is having to retool to deal with the country's new fuel-saving consciousness, the state already has shifted tax gears to reward its residents for other energy efficient moves. 

For tax years 2009, 2010 and 2011 Michigan taxpayers can claim two new credits -- the Energy Home Improvements credit or the Appliances and Electric Surcharge credit -- on their state income tax returns.

Energy Home Improvements Credit: The home improvement tax credit rewards homeowners who make energy-efficient improvements to their principal residences. Upgrades fall into five categories:

  1. Insulation
  2. Furnace
  3. Water Heaters
  4. Windows
  5. Refrigerators, Clothes Washers and Dishwashers

The credit is 10 percent of an improvement's purchase and installation price with a maximum tax benefit of up to $75 dollars for single taxpayers, $150 for married couples filing jointly.

But here's the good part. A separate credit is allowed for each category.

So an eligible single taxpayer who purchased and installed a qualifying appliance or made an approved home improvement from each category in the same tax year could claim a maximum credit of $375. Double that for couples.

Plus, it's refundable, meaning you could get money back if you don't owe the Michigan tax collector.

Energy Cost Recovery Surcharge Credit: The surcharge credit is based on an itemized amount that appears on residential electric bills as a "renewable energy surcharge."

While the home improvement credit is limited to homeowners, the surcharge credit is available to both homeowners and renters who have paid electric bills for the tax year they are claiming.

It's not a huge tax break. The maximum credit is $3 per meter for 2009 and $7.20 per meter for 2010 and 2011.

And the surcharge credit is nonrefundable, meaning it can zero out your tax bill but not get you a refund. Still, not owing the tax man anything is a pretty good deal.

Income limits apply to both credits. For those amounts and additional information on each tax credit, check out the Michigan Treasury's special Web page.

Tax trip around the United States: This post is part of our series highlighting tax information from the 50 U.S. states and Washington, D.C. You can read other state tax blurbs at our Complete menu of tasty state tax tidbits.

The State Tax Departments page provides links to official state and District of Columbia revenue Web sites so that you can find out more about your home's tax laws and filing requirements.

As we work through the 2010 tax season, a different state will be featured each day as noted in Don't forget your state taxes! Check back to see what tax tidbit we share about your home.

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AC installation largo

Home improvement tax credit rewards for homeowners? I think it sounds great... :)

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