Does a Generator Qualify For Energy Credit?

Installing a residential emergency generator on your property requires a bit of an investment. If you’re weighing the benefits of installing a backup generator, you’re likely wondering if there are any tax cuts, energy rebates, or reimbursements that can offset the cost. 

Here are a few ways you may qualify for a tax credit when you buy a standby generator.  

Energy Tax Credits for Generators

While federal renewable energy tax credits incentivize homeowners to make several property upgrades, installing a generator does not currently qualify under Energy Star’s list of tax credits. 

However, some states and local utility companies offer energy tax credits, rebates, or other incentives to install generators that use clean-burning fuel sources, such as natural gas

Check with your state’s energy department and local utility company to see if your generator purchase or installation qualify for any credits.    

Generators Purchased for Medical Equipment

Suppose you install an emergency generator to provide a constant power supply to electrical medical equipment. In that case, you may file the cost of the generator as a capital expense on your taxes.

“You can include in medical expenses amounts you pay for special equipment installed in a home, or for improvements if their main purpose is medical care for you, your spouse, or your dependent,” explains the IRS

Use the IRS Capital Expense Worksheet to calculate medical expenses related to home improvement projects, such as generator installation.

The IRS stipulates that if installing the generator has increased the value of your property; you’ll need to deduct the increase in value from the cost of the generator to calculate the difference, which will qualify as a medical expense. If the installation has not raised your property value, the generator’s entire cost can count as a medical expense. 

For your generator’s cost to qualify as a medical expense and provide a tax credit, you may need to supply documents proving that the generator is essential to meeting you or your dependant’s healthcare needs.

Capital Gain Tax

Since installing a generator can increase your property’s value and help you make a more significant profit when you sell, you may qualify for a capital gains tax credit. By submitting the receipt for your generator, a tax break may be applied toward the capital gains tax after you sell your home. 

Work with your accountant to determine what sort of tax credit you may benefit from when installing a generator.

Natural Disasters

In the event of a disaster in your area, the Federal Emergency Management Agency (FEMA) offers reimbursement for generators purchased or rented during the time of the disaster.

Generator costs incurred between the moment the local government declares a state of emergency and when the emergency ends, or the power comes back on may qualify for FEMA reimbursement. 

“For reimbursement of generators purchased during the Qualifying Incident Period: The cost will be reimbursed at the prevailing retail rate for a 5.5 kW-sized generator, as identified by FEMA,” explains the agency. 

However, it’s important to note that it is better to prepare for an emergency beforehand, since supplies and communications may be limited when disaster strikes.

Install a Backup Generator – Indiana 

Midwest Generator Solutions offers top-of-the-line generators and professional generator installation in Indiana, Kentucky, Ohio, Illinois, and Michigan. 

Contact us to find the right energy-efficient generator for your property.