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How Green Tax Credits Work

        Money | Taxes

Solar panels and other green improvements have, at various points, been a way to get tax credits.
Solar panels and other green improvements have, at various points, been a way to get tax credits.
Andreas Weber/iStockphoto/ThinkStock

Henry David Thoreau wasn't America's first environmentalist, but he was certainly one of the more vocal ones to come onto the scene in the 19th century. The celebrated author and noted loner was an early advocate for environmental stewardship. When he traipsed off to Walden Pond to live in seclusion, Thoreau did so with the intent to live simply and minimize his impact on the natural surroundings. What was the result of this bold move? A book ... and a hefty tax bill. You see, Thoreau, who later wrote "Walden" based on his experience in the woods, was thrown in jail during one of a few trips into a nearby town when he refused to pay the poll taxes he'd been avoiding for years.

These days, U.S. tax authorities are a little more accommodating of folks who want to live the green life. The Internal Revenue Service isn't going to let you off the hook for unpaid taxes if you hole yourself up in a cabin in the woods, but federal lawmakers have enacted some incentives for folks who make their homes and cars more energy efficient. Some of those incentives recently expired, and their long-term fate remains unclear. Others are still available for bigger ticket energy efficiency projects.


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