Here are some of the credits available to reward energy efficiency.

We have all noticed higher energy prices lately. At the time of this writing, the average price for a gallon of gasoline has increased to nearly $3. While these prices are high, experts see no end to high prices in the near term. In addition to high fuel prices, the nation's electricity grid is experiencing problems. Every year consumers and businesses use more and more electricity. This burden tends to create problems for energy carriers. With this in mind, the federal government has come up with an energy bill that is creative, generous and has direct benefits for businesses.

Deduction for energy-efficient commercial property.

Taxpayers may claim a deduction for energy-efficient commercial building improvements placed in service after 2005 and before 2008. The maximum deduction is $1.80 per square foot. To qualify, the improvement 1) must be depreciable or amortizable; 2) must be installed as part of the interior lighting system, heating, cooling, ventilation, hot water, or the building itself; and 3) must be installed pursuant to a plan to cut total energy and power costs by 50%.

Homebuilder's credit for new energy-efficient homes.

The energy bill also allows contractors a tax credit of $1,000, or $2,000 for buildings qualified as new energy-efficient homes. The contractor must construct a new energy-efficient home or new energy-efficient manufactured home. The home must be located in the United States, built substantially after the enactment of the statute, and must meet specified energy savings. If you are in the process of building a new home, you should discuss the credit with your builder.

Business solar investment tax credit.

The business investment credit for solar energy property has been increased from 10% to 30%. This credit applies to 1) equipment which uses solar energy to generate electricity, heat or cool a structure, heat water, or provide for solar process heat and 2) equipment which uses solar energy to illuminate the inside of a structure using fiber optic distributed sunlight.

Credit for manufacturing energy-efficient appliances.

This credit applies to the manufacture of energy-efficient appliances such as dishwashers, washers and refrigerators. This credit was added on as an amendment to the general business credit. Manufacturers are allowed between 2 and 3 percent of their gross receipts as the credit. The credit aggregate amount is limited to $75 million.

Green vehicles.

Thought of more as a consumer credit, vehicles which run on alternative fuels and hybrids are also eligible for a tax credit. The amount of the credit ranges from $400 to $2,500 based upon the model. Alternative fuel cars include cars which are outfitted to run on liquefied petroleum, hydrogen, ethanol, natural gas, etc.

Many people are aware of the hybrids and are well aware of the fact that they are eligible for a credit. What many people and businesses do not know is that the cars they are driving right now may qualify for the credit as an alternative fuel vehicle. Vehicles manufactured by Ford, GM, Dodge and a variety of Ford manufacturers since 2002 are vehicles equipped to run on E85 and are eligible for the credit as an alternative fuel vehicle. Also, E85 tends to be 40 cents cheaper than gasoline!

Now that energy has become a central issue again, fuel conservation is important to the government. This energy bill is a good step in the right direction.