In much of the developed world, there is a growing interest among the general public in “going green,” or, at the very least, considering the environmental consequences of their actions and lifestyle choices. With issues like global warming, water pollution, and unsustainable farming practices becoming increasingly prominent in the public eye, concern about the environment is only going to increase among members of the general public.
Both the federal government, and the governments of most states, are also concerned about the environment, and have created a huge number of environmental regulations which affect everything from large construction projects all the way down to the ingredients that can be used in house paint.
However, in addition to prohibiting or requiring certain conduct with an eye towards protecting the environment, there are also many government incentives that are meant to encourage citizens to voluntarily engage in environmentally-friendly practices, and to spur the development of alternative energy industries.
This article will cover some of the legal and financial incentives that the U.S. government (and, to some extent, the governments of individual states) have put in place to encourage people to adopt a more environmentally-friendly lifestyle.
One of the most powerful tools that governments have to encourage conduct that’s considered desirable, without outright mandating it, is to provide tax incentives in the form of tax credits or deductions.
A tax deduction is simply a subtraction from your taxable income. So, suppose a person has a taxable income of $100,000 in a given year, and they are taxed at 10% (in reality, the tax rate of a person with that income would be significantly higher, but I’m using round numbers to keep things simple) per year. Their tax bill is then $10,000. But suppose they get a tax deduction of $20,000. In that case, only $80,000 of their income would be taxable. So, their final tax bill would be only $8,000.
A tax credit, on the other hand, is simply a direct reduction in a person’s tax liability. So, a tax credit is generally more lucrative than a tax deduction of the same amount.
The federal government offers several tax deductions and credits to encourage people to buy environmentally-friendly products, such as electric cars and solar panels, by partially subsidizing the price of these products.
For example, the purchase of an electric car entitles you to a federal tax credit of up to $7,500.
However, this tax credit is non-refundable, meaning that, to get the full benefit of it, your income tax liability must meet or exceed $7,500. If your tax liability is less than $7,500, the tax credit will have the effect of reducing your tax bill to zero, but you will not be getting the maximum possible benefit.
There are also smaller tax credits and deductions available to people who install solar panels or other energy-saving features on their homes.
Environmental/Land Use Regulations
If you are undertaking a larger green home improvement project, which may include significantly altering the structure of a building, you need to make sure that you do not run afoul of any federal, state, or local environmental laws or land use regulations.
There is simply no way to cover all of these regulations in a single article. However, there is still some practical advice to be had. First of all, if you hire a contractor to do the project, you should research them thoroughly and make sure that they do not have a record of being cited for environmental law violations. If a contractor that you’ve hired commits an environmental law violation on your property, you may be held legally responsible, with large fines possibly resulting.
You should be especially careful if your property is near any major water source, such as a river, a lake, or the ocean. The federal government has the power to regulate “navigable waters,” and those all fall into that category. There are very strict federal regulations meant to prevent water pollution. Most of these regulations are found in the Clean Water Act. You should make sure that any contractor you hire has no history of violations of that law.
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