Don't Mess With Taxes

What's your cap-and-trade tax burden?

The House on Friday approved H.R. 2454, the American Clean Energy and Security Act. It's the first ever piece of U.S. legislation designed to curb heat-trapping gases linked to climate change.

As you already know, regardless of which side of the global warming argument you're on, getting a final bill is not going to be easy. House Democrats were unsure early Friday whether, despite the party's majority, they had the votes for passage. They did, barely.

H.R. 2454 was approved 219 to 212, with 44 Democrats voting against it. 

Now the battle moves across Capitol Hill, where the Senate must approve its own version of energy legislation. Then a House-Senate conference committee will have to resolve the two bill's differences in a manner that will get the joint legislation OK'ed by all lawmakers and in a form that Obama will sign into law

Get ready for more, pardon the pun, heated debate. The close House vote was just the beginning. Judging by the reactions to yesterday's House vote, it will be just as close a call in the ostensibly more deliberative body.

What's it gonna cost me?  Speaking as someone who's just a week into summer and is already fed up with the three weeks (so far) of 100-plus temperatures that are frying me, my plants and my air conditioning system, I'm for any possible help.

But like every other American, I have one big question. What does this bill, at least the House version, mean to my bank account?

The legislation focuses on operational changes for many business sectors, including electric power generation, manufacturing, agriculture and construction. These industries will face a cap-and-trade system that limits overall emissions of heat-trapping gases while allowing certain companies to trade pollution permits with each other. 

The system would be phased in over several years, which supporters say should keep costs low. But there will be costs to industry, which will be passed along to you and me.

The Congressional Budget Office says the average American household would pay an additional $175 a year in energy costs by 2020 as a result of the provision. The poorest households would receive rebates that would lower their annual energy costs by $40.

Pre-vote numbers crunched by the American Council for an Energy-Efficient Economy (ACEEE) indicated that the federal energy efficiency provisions in the bill could save each household approximately $1,050 by 2020 and $4,400 by 2030.

Opponents counter that more than 70 percent of Americans will pay higher costs without receiving any tax or other relief under the bill. A family of four with income over $33,000 per year would receive only nominal benefits and no tax credits under the bill to offset its negative effects, according to GOP Ways and Means members who voted against the bill.

Run your own numbers: Of course, these are all just estimates prepared by groups with particular political positions.

For me right now, looking at the thermometer inch toward its predicted high today of 105 degrees, I'd be willing to pay more to have late June temps in the 90s. But we shall see, both what eventually becomes law and what its true costs are.

The Tax Foundation offers some help in our personal energy cost computations. The nonpartisan group has created a Household Cap-and-Trade Burden Calculator to see how much money your household would lose.

The group also has released a cap-and-trade parody video, created by Remy, as well as the working paper "Who Pays for Climate Policy? New Estimates of the Household Burden and Economic Impact of a U.S. Cap-and-Trade System."

The Environmental Protection Agency has put together an analysis of H.R. 2454.

And Earth2Tech provides a good report of what's in the House measure, the vote and opposition arguments. 

House vote screen shot courtesy C-SPAN

Bicycling tax break injustice?

My neighbors here in the Lone Star State's capital love their bicycles. That's no surprise in the city that is home to seven-time Tour de France champ Lance Armstrong.

How committed are Austinites to this transportation alternative?

Temperatures here have been near or over 100 degrees for weeks, yet bicycle riders, many wishfully attired in yellow biking jerseys, still have been hitting the roads and hills -- yes, inclines in sweltering weather! -- in droves.

So there was generally joy when it was announced that the guy who stole Lance's $10,000 ride while he was competing in a California race would be going to jail for the offense.

Is the three-year sentence, expected to be officially handed down next week, too long? Sports Pros(e) has some good thoughts on the legal considerations involved in the case.

Biking tax breaks: As for me, being a tax geek, all this talk of Lance's bike brought to my mind a two-wheel tax break and the injustices contained in it.

First the good news. Since Jan. 1, bicycling commuters have been a part of the tax code that allows for employer reimbursement of certain workplace transportation costs.

The Bicycle Commuter Act, a separate bill that languished in Congress for years, finally was enacted last October and took effect this year.

The original goal was to give cyclists the same employer-provided tax-free fringe benefit status as workers who receive qualified transportation benefits, or QTFs, for using public transit or driving (parking, actually) their cars to and from work.

But things didn't quite work out that way. Folks who take buses, trains, commuter vans or drive their own autos still get a better reimbursement deal from their bosses. But at least bikes this year finally make it into the mix.

Under Section 132(f) of the Internal Revenue Code, bicyclists can use special tax-favored workplace accounts to help defray some of their special commuting costs. This includes such things as the purchase of a bicycle, bike lock, helmet, bike parking fees, shower facilities and general bike maintenance.

Depending upon how your company offers the commuter fringe benefits, you might need to provide receipts to be reimbursed, sign up for regular monthly payments or deal with a voucher system offered by your employer.

Unfair limits? While the new tax-favored transportation benefit was generally welcomed by bicyclists, it does have some limitations.

It's available any month that an employee meets two conditions:

1. The employee regularly uses a bicycle for a substantial portion of travel between his or her residence and workplace and -- and here's the kicker --

2. The employee does not receive any other qualified transportation benefit in the same month.

So if you take the bus and load your bike on the front of that public transportation option, and then use your bike to get from a bus stop to your job, you only get the mass transit QTF reimbursement. The reason you'll opt for the bus payback is that it's more than the allowable bike money.

The law offers $20 a month untaxed reimbursement for bicycle commuter expenses.

The mass transit commuting benefit, however, since March 1 (thanks to changes in American Recovery and Reinvestment Act of 2009, better known as the Obama stimulus plan) has paid up to $230 a month, the same amount available to workers who drive to the office and pay to park.

These commuter account limits will be in effect through 2010 with an inflation adjustment.

Previously, parking payments were larger ($230 a month vs. $120 a month), which mass transit advocates saw as favoring drivers. The change evens the playing field for all commuters.

All, that is, except bicycle commuters.

Comparing costs: In 2009, that's a maximum $240 in tax-free fringe benefits for commuting by bicycle. Compare that to up to $2,540 for mass transit and van pool commuters ($120 for January and February commuting costs plus $230 for each of the next 10 months) and $2,760 in tax-free transportation fringe benefits for workers who this year drive to work and pay to park.

What's wrong with this picture? The photo to the left (taken by the hubby) is an amusing tribute by a local nursery to Lance's historic seventh Tour win.

But the tax-break image isn't that pleasant.

In fact, folks who commute in the most exhaust spewing method get the biggest tax rewards.

So this hot Texas weather isn't the only thing that's discouraging commuters from taking the most environmentally friendly route to work. The tax code also is a deterrent to truly energy-efficient transportation.

Expansion efforts: The sponsor of the Bicycle Commuter Act is trying again.

In February, Rep. Earl Blumenauer (D-Ore.) introduced H.R. 863. This bill would amend the tax code to allow employees use of both the transit and bike benefit in the same month.

So far, the bike bill is still parked in the Ways and Means Committee. But if it does eventually roll out for further consideration, Blumenauer hopes this time he gets to vote for it.

Last October, although his bicycle commuter language was part of the financial services bailout bill, the Congressman voted against the measure because so many of his constituents opposed it.

Bicycle commuter photo courtesty MoBikeFed/flickr

Car sales tax break for no-tax states

Gas prices went up again today. It's the 48th straight day they've increased, matching a record for this decade.

If that trend continues, some folks might be seriously thinking about buying a new, more fuel-efficient car.

What makes the option, even in a recession, more appealing is that there are some tax breaks associated with certain vehicle purchases.

And the IRS just improved one of those tax benefits that had been out of reach for some buyers.

The American Recovery and Reinvestment Act of 2009, aka the latest stimulus package signed into law on Feb. 17, includes a deduction for state and local sales and excise taxes paid on the purchase of new cars and other vehicles.

The deduction also covers taxes paid when you buy a new light truck, motor home or motorcycle. 

This tax break, as most do, also has some limits (which I'll get to later), but for most people, it is a welcome addition to the tax code. Unless you live in a place with no state sales tax.

The residents of Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon, however, have been feeling a a little bit cheated.

Not to worry. The folks at the IRS and Treasury Department put their heads together and decided that lawmakers really meant to give everyone, regardless of their state's lack of a sales tax, a more-or-less equal break. So the feds announced that the new vehicle deduction also is available in states that do not have a state sales tax.

Buyers of qualifying vehicles in no-sales-tax states will be able to deduct other fees or taxes imposed by their state or local governments. These fees or taxes must be assessed on the purchase of the vehicle and must be based on the vehicle's sales price or as a per unit fee.

"This special tax break is available for people purchasing a new car this year, and that can include people in states without a sales tax," said IRS Commissioner Doug Shulman in announcing the deduction interpretation. "This means that more people can take advantage of this deduction when they file their tax returns next year."

Other rules remain: Now about those limitations I mentioned earlier. While everyone now is a bit more pleased with the vehicle sales tax deduction, like almost every other tax, it has some limits.

Qualifying vehicles must be purchased between Feb. 17, the date the stimulus bill became law, and Dec. 31. If you bought a new auto in the first six or so weeks of the year, you are out of luck when it comes to this deduction, which you'll claim on your 2009 tax return that you file next year.

The amount of your deduction also is limited by the price of your vehicle. You can only count the taxes (or other eligible fees) paid on the first $49,500 of the purchase price of the vehicle.

Here in Austin, the sales tax is 8.25 percent (part of the price of not having an income tax in Texas). If the hubby and I bought the new $66,000 Mercedes we've been dreaming about, we wouldn't be able to deduct the entire tax amount. 

Rather, we could only count the tax on $49,500 of the vehicle's purchase price, or $4,084. 

Be sure to hang onto your auto sales documents that list the price of the vehicle and precise amount of tax paid. You'll need the information when you file.

And the amount of the deduction is phased out if your modified adjusted gross income (that's your AGI with some things added back in) is between $125,000 and $135,000 and you file as an individual taxpayer or between $250,000 and $260,000 and you and your spouse file a joint return.

Claiming the deduction: As I mentioned, you don't have to itemize to claim this tax break.

If you take the standard deduction, and most people do, you'll simply add the eligible tax to your standard deduction amount on your 2009 tax return.

For example, the standard deduction in 2009 for married couples is $11,400. If a couple pays 6 percent sales tax on a $30,000 car, they can add the $1,800 sales tax to the $11,400 and claim a standard deduction of $13,200.

If that couple is in the 25 percent tax bracket, that $1,800 deduction could be worth $450 in tax savings.

For folks who do itemize, if you you choose to deduct to deduct sales taxes instead of income taxes, you can claim your vehicle taxes on your Schedule A as part of your overall sales tax deduction.

Even better, in this case, you're not limited to the $49,500 purchase price cap or the income phase-out limits. You can deduct the full amount of the sales tax (to the extent that it does not exceed the general sales tax rate) either as part of your detailed listing of all our sales tax receipts or by adding the vehicular tax amount to the sales tax table for your state that the IRS provides.

Neither are you subject to the income limits that apply when the new vehicle tax deduction is claimed as part of the standard deduction.

Added tax benefits: If the high gas prices prompt you to buy a hybrid, remember that some of those vehicles also can get you a tax credit.

Toyota and Honda credits have disappeared and Ford's hybrid credit will phase out a bit more come Oct. 1, but full credit amounts remain for eligible GM and Chrysler vehicles. Not that Uncle Sam, majority shareholder in those last two U.S. car makers, has any preference. You do your homework and see which hybrid, with or without a credit (IRS keeps track of the qualifying makes and models), is best for your driving needs.

And you might also want to wait just a bit if you can. Tax Update Blog notes that Capitol Hill is exploring the possibility of even more auto purchase incentives via a "cash for clunkers" program.

Under one proposal, folks who traded in what the government deemed gas guzzlers would get vouchers of $3,500 or $4,500 to use toward the purchase of a new vehicle with better mileage.

If that idea does eventually make it into law, it looks like the latter part of 2009 might be a good time for you to visit whatever dealerships remain in your neighborhood and see what kind of sticker price and tax break deals you can get.

No highway tax dollars at work

When I was a kid, I always got a kick out of the sign that was posted alongside road crews: Your highway tax dollars at work.

Yes, I was a weird kid, noting tax-related situations at a young age. No comments, please, from the Peanut Gallery (or hubby) about the use of the word "was."  That's not the point, or at least not the main one, of this post.

The point today is that you don't see, or at least I haven't seen, those signs in a long time. And there's apparently a good reason for their disappearance.

There's no money, for the second consecutive year, for roads.

Emptying out the highway fund: Cash for construction and repair of most of our roads comes from the federal Highway Trust Fund. Last week, federal officials announced that account is likely to be out of money by end of the summer.

According to the New York Times story Congress Grapples, Again, With How to Pay for Transportation Projects, "lawmakers said they might be forced to bail out the fund in August with $5 billion to $7 billion from general tax revenues, just a year after they provided it with an $8 billion bailout."

You and I, who will have to eventually pay for such replenishing of the trust fund, also are part of the reason it keeps running short. The bulk of the money funneled into the account comes from the federal gasoline excise tax. And for the last couple of years, we've not been driving enough to keep the highway fund steadily in the black.

Around this time In 2008, pump prices hovering around $4 a gallon were a great reason for limiting road trips. This year, gasoline prices are about half that, but the recession has put a crimp in our motoring.

And fewer fill-ups mean less gas tax money for the Highway Trust Fund.

So how does Washington plan to make up the difference? Well, there's that aforementioned transfer of general tax collections to the highway account. Supporters of the tax shift say it's a must-do, especially since infrastructure projects are key to keeping the economy from grinding to a total halt.

And don't forget that Uncle Sam now owns 60 percent of GM. Being a good business owner, he would really like for purchasers of his shiny new Chevys to be able to hit well-paved roads.

Time for a tax hike? But some lawmakers are balking at yet another bailout, even one connected to America's love of all things automotive.

That's led to the virtually unthinkable: Members of Congress in both parties talking about hiking the federal gas tax.

Yep, it definitely is not an election year. Remember in 2008 when presidential candidates were falling over themselves calling for a summer gas tax holiday?

But times and political considerations have changed. There's a growing consensus that it's about time to discuss, if not actually raise just yet, the 18.4 cents per gallon gasoline tax. It's been at that level since 1993, and over the years inflation has eroded about a third of the tax's purchasing power.

Gas tax opponents fear an increase would be counterproductive. Higher fuel prices, they say, will simply mean people will cut their drive time even more.

Plus, they argue, as drivers and manufacturers embrace more fuel-efficient cars, any tax hike is likely to turn out to be just a temporary trust fund solution.

If the gas tax goes up, will it affect your driving habits? Have you purchased a more fuel-efficient car? Do you plan to do so soon?

Related posts:

• Reduced driving leads to crummy roads
• Gas tax holiday is dead, higher gas tax possible
• Read his lips: no federal gas tax hike
• Time to hike the federal gas tax?

Memorial Day sales tax holidays

We got lucky this week in Central Texas. Temperatures have been seasonal, meaning we've had nights in the upper 50s and days in the low 80s.

Our suburban neighborhood always seems a bit cooler than the city's official thermometer readings, so the hubby and I were able for three days this week to turn off the air conditioning and make do, quite comfortably, with ceiling fans. One night I even had to pull out a light blanket to counter the cool air that filled the house through our open windows.

But that’s definitely changing. Soon we'll be in the heart, and heat, of summer. That means a string of triple-digit temperature days.

Such hot Lone Star State summers mean that air conditioners get a workout. And that means they conk out sooner rather than later.

Texas tax holiday: This long Memorial Day holiday weekend, the state is providing a tax break to Texans (and shoppers from neighboring states) who are considering replacing their dead or dying A/C units.

Texas' Energy Star Sales Tax Holiday kicks off at 12:01 a.m. on Saturday, May 23, and ends at 11:59 p.m. on Memorial Day, Monday, May 25.

During these three days, state and local sales and use taxes are waived on purchases of certain products bearing the Energy Star logo.

They include, listed alphabetically:

• Room and central air conditioners priced under $6,000
• Clothes washers
• Ceiling fans
• Dehumidifiers
• Dishwashers
• Light bulbs, both incandescent and fluorescent
• Programmable thermostats
• Refrigerators costing less than $2,000

I know. You're wondering why clothes dryers aren't on the list.

The Texas Comptroller's office says it’s because most dryers use similar amounts of energy so Energy Star does not label clothes dryers. No Energy Star rating, no sales tax break. Sorry.

Plus, if you really want to be energy efficient – and irritate your homeowners’ association – hang your clothes out to dry in your backyard.

Don’t forget the federal credit: My fellow Texans (and visiting shoppers from New Mexico, Oklahoma, Arkansas and Louisiana) also should check out the possibility of getting a federal break on top of their state sales-tax bargain.

The recently-enacted American Recovery and Reinvestment Act (aka Obama stimulus measure) reauthorized and enhanced the federal tax break for several energy-efficient home improvements. In the case of an A/C, you might be able to get a tax credit of up to $1,500 on your 2009 federal return.

Virginia's tax break for being prepared: Memorial Day also marks the start of a special sales tax holiday in Virginia.

The seven-day event (May 25-31) in the Old Dominion State offers no-tax purchases of certain hurricane preparedness equipment.

Among the eligible purchases are portable generators costing $1,000 or less and other storm-preparation items priced at $60 or less each. Virginia's Department of Taxation has posted a list of eligible items.

Personally, I try to avoid shopping, especially during high-traffic times such as holiday themed sales. But having lived through a couple of Florida hurricanes and a few more tropical storms, I know how important it is to be prepared.

So Virginia’s sales tax break makes hitting the stores next week to stock up in advance of the coming storm season a no-brainer.

Earth Day tax breaks

Happy Earth Day!

To encourage us to be more environmentally friendly not just on April 22, but on every other day of the year, Uncle Sam offers several tax breaks.

Home
As noted in my earlier post on Missouri's energy-efficient appliances sales tax holiday, you can claim a tax credit on the federal level for certain home improvements.

The American Recovery and Reinvestment Act (AKA the Obama stimulus) which became law on Feb. 17 offers taxpayers a credit of up to $1,500 for some energy-efficient home improvements.

Under the federal credit, which can be claimed on 2009 returns filed next year, eligible improvements include such residential upgrades as air conditioners, furnaces, storm windows and doors, insulation and even window film, as long as the products meet Energy Star standards.

The table on page four of this story, 7 housing laws you don't want to miss, offers an overview of some of the new federal home energy tax credit. Additional info, and a longer table, can be found at EnergyStar.gov.

Auto
Gasoline prices are still relatively low, but I suspect they'll creep up as the summer vacation driving season nears. That might get some folks thinking about buying a new energy efficient auto.

Some hybrids still offer decent tax credits. The tax break for Ford hybrids has begun phasing out, but if you're a dedicated GM fan and believe the automaker will survive, the full credits are still available for its eligible hybrid vehicles.

The IRS has put together a table listing 2009 model year hybrids and their credit amounts. You can find prior model years and credits at this IRS page.

Charity
Contributions to charitable organizations generally are deductible as long as you itemize. Give to an IRS-qualified group that supports environmental causes and you get the two-fer of supporting a good eco-cause and reducing your tax bill on next year's return.

Locally, I'm a fan of the Lady Bird Johnson Wildflower Center. But there are lots of worthwhile environmental causes out there. Check out IRS Publication 78 to find one that meets the tax agency's standards and your philanthropic inclinations.

Missouri's doubly green sales tax holiday

Helping folks save a few bucks while saving the planet is a goal of Missouri tax officials.

The Show Me State kicks off 2009's sales tax holiday season Sunday, April 19, waiving tax collections on purchases of certain energy-efficient appliances. The holiday wraps up April 25.

It's no coincidence that Earth Day, April 22, falls smack dab in the middle of Missouri's Show Me Green tax holiday.

Retailers are hoping that the annual celebration of all things environmental, coupled with the exemption of sales taxes, will boost sales of energy-efficient appliances.

Savings beyond the state levy: Buyers of the qualified items definitely will avoid paying the state's 4.225 percent sales tax during the seven days of the tax holiday.

Some of them might get even bigger breaks, as nine counties, 58 cities and eight special taxing districts also will take part in the tax holiday.

The full list of participating jurisdictions is available in the Missouri Department of Revenue's announcement of the holiday.

What's not taxed? The eligible appliances must meet Energy Star standards. They are:

• Clothes washers
• Refrigerators
  
• Freezers
• Dishwashers
• Water heaters
• Furnaces
• Air conditioners
• Heat pumps

Price limit, too: There's also a limit on tax savings based on the price of the appliance.

The sales tax exemption only applies to the first $1,500 on each appliance. If an appliance costs more than $1,500, regular sales tax is collected on the purchase amount in excess of $1,500.

Latest holiday on Missouri tax calendar: The state's first-ever appliance sales tax holiday is actually the second one it will hold this year.

The weekend of Aug. 7-9, Missouri shoppers can pick up a variety of computers, clothing and school supplies sans state (and some local) sales tax.

And lawmakers also are looking at making most of July tax free for shoppers.

The Independence Day Sales Tax Holiday, which is now being considered by the state legislature, would run from July 4 through July 31 and exempt sales taxes on all merchandise and services purchased in the state.

Don't forget the feds: Uncle Sam also could make the tax savings even better for Missouri shoppers and those from nearby states who cross state lines to save a few bucks.

The American Recovery and Reinvestment Act (AKA the Obama stimulus) which became law on Feb. 17 offers taxpayers a credit of up to $1,500 for some energy-efficient home improvements.

Under the federal credit, which can be claimed on 2009 returns filed next year, eligible improvements include the furnaces and air conditioners that are tax free for a week in Missouri.

The table on page four of this story, 7 housing laws you don't want to miss, offers an overview of the new federal home energy tax credit. Additional info can be found at EnergyStar.gov.

So if you know you need to upgrade these items and it's cost-effective to buy them in Missouri, do so this coming week. That way you'll save some state (and possibly local) taxes now and get more savings on your 1040 when you file next year.

More holidays on the way: As I noted, this is the first sales tax holiday of 2009. A couple are in May, with the bulk of the events aimed at back-to-school shoppers and held in late summer (August). I'll get that full list up shortly. Stay tuned!

Related posts:

• Energy-efficient home tax breaks are back

• 0% energy improvement loans 

• Earth Day tax celebration

Still time to save on autos & taxes

If you really believe gasoline will continue to cost around $1.50 a gallon, give me a call. I have a personal bailout package you might be interested in funding.

Sooner rather than later, OPEC is going to say "enough" and do what it takes to push pump prices up again. They may not reach $4 a gallon again, but they likely will be at least double what we're paying now. And there is some sentiment to add to our fuel costs via increased gasoline excise taxes.

So if you've got some cash to spare, it might be a good time to trade in your gas guzzler for a more fuel-efficient auto.

Locally, we're seeing a lot of ads from the U.S. automakers, promising a combination of rebates, low-financing deals and that they'll still be around to help you keep your car running.

Even some luxury car companies are getting in on the act. Mercedes-Benz is touting a 3.9 percent loan rate for "qualified buyers." Of course, that rate is for Mercedes' larger vehicles, not its ultra efficient (and ultra tiny) Smart car (pictured there on the right).

As appealing as it might be to own any type of Mercedes, a Smart is just too small for me, especially here in Texas. No, not just because of the Lone Star State's obsession with over-sized everything, but because 70 mph (or faster) is the going speed on many of our highways. One pass by an SUV or even a medium-sized sedan, and I fear the Smart would be literally blown off the road!

But there are plenty of more typically-sized fuel-efficient autos out there and, in some cases, Uncle Sam will help you make the purchase.

Tax help for hybrid purchases: I'm talking, of course, hybrids. These vehicles are what General Motors and Chrysler are going to have to focus on to keep their federal loan money. And many of their currently produced hybrids qualify for the alternative fuel tax credit, for 2008 filings and beyond.

If, however, you prefer a Japanese vehicle, tax-saving time is almost over. The tax credit for Toyota's Prius is long gone and on Jan. 1, the tax break for Honda's hybrid Accords and Civics also disappears. If you want one of those, along with a nominal tax credit when you file your tax return, you better head to your Honda dealer today or tomorrow.

As for the rest of the tax-credit eligible autos, check out this running list (tables below the text) that the IRS maintains.

Happy, and cost- and fuel-efficient, motoring!

Reduced driving leads to crummy roads

Fewer cars on the road apparently isn't necessarily a good thing. In fact, reduced driving is likely to mean our roads and bridges will deteriorate more quickly.

Isn't that a bit counterintuitive?  I mean, the fewer cars on the road, the less pounding the asphalt takes, right? And that means it's a smoother ride for those fewer vehicles hitting the highways.

But that's not how it works in the real, and tax, worlds.

High fuel costs lead to less driving. That means fewer fill-ups. Which means fewer fuel excise tax dollars collected. And that means a smaller balance in the federal Highway Trust Fund, which pays for major road and bridge repairs.

Highway Trust Fund revenue fell $3 billion in fiscal year 2008 as Americans drove almost 11 billion fewer miles, according to the U.S. Transportation Department. 

Transportation Secretary Mary E. Peters noted that we drove 4.4 percent less, or 10.7 billion fewer vehicle miles traveled, in September 2008 than September 2007. It was the 11th consecutive month of declining driving.

And while the road repair account took a $3 billion hit, DoT officials say federal transportation spending increased by $2 billion.

It doesn't take a math whiz to see exactly what road that calculation will take us down.

Gas taxes across the USA: The The American Petroleum Institute (API), the national trade association for the U.S. oil and natural gas industry, regularly tracks gasoline and diesel fuel tax rates. API's October data shows that the national gas tax average, a combination of federal and state levies, is 48.4 cents per gallon.

The map below gives a good indication of where gasoline taxes are higher. Red states have combined federal and state gas taxes greater than, and in some places much greater than, 48.4 cents per gallon. Yellow state taxes are between 40 and 48.04 cents per gallon. Blue states charge less than 40 cents per gallon.

You can click on the map for a larger version (or here if you're reading via feed; to see a map of diesel taxes, click here).

More details on state fuel tax rates can be found in API's chart (PDF version), which reflects a weighted average for each state. This means that any taxes which can vary across a state's jurisdiction are averaged according to the population of the local areas subject to each particular tax rate.

Lower gas prices, more tax revenue? There is hope, however, that the Highway Trust Fund might get a bit of a boost.

Crude-oil prices have fallen below $50 a barrel, and the average cost of a gallon of gasoline is just over $2. The last time motorists paid less than $2 for a gallon of gas was March 2005, when a gallon of regular cost an average $1.99.

As the prices at the pump increased, we changed our driving behavior. Mass transit and car pooling gained converts. When we had to driver, we hit the road in smaller, more fuel-efficient autos.

Will we keep it up when gas is more affordable? Maybe. Maybe not. If we do, that's better for the country and environment in the long run. If not, then at least the increased fuel purchases will add to the highway repair account.

Regardless of what you drive and the price of gas, it never hurts to squeeze the most miles you can out of your auto, especially in this economy. These 10 tips to help you get better mileage.

Energy-efficient home tax breaks are back

NOTE: This post was revised 11/20/08
to clarify the eligibility dates
for available energy-efficient
home improvement tax credits.

Winter has already arrived in some parts of the country. Down here in Central Texas, we're expecting our first freeze this weekend. That means it's finally time to turn on the heater. Depending upon what type of heating system you have, it also will mean higher utility bills.

We're pretty lucky here in the Austin area. Winters aren't that long or cold, so I've found that the hubby and I actually save a little money during this season. Plus, we have gas heat, which is less costly that the two electric air conditioning units that run almost nonstop during the triple-digit degree days of summer.

Regardless of which season costs you more, Uncle Sam might be able to help you reduce some of your utility bills. If you make some energy efficient home improvements to your house, not only will your heating and/or cooling bills be lower, you also might be able to claim a tax credit for the upgrade.

Under the original Energy Policy Act 2005, homeowners were allowed several credits for improvements that made their residences more energy efficient. Most of these tax breaks expired at the end of 2007.

But when the Emergency Economic Stabilization Act of 2008 became law in October, these home improvement tax credits (and more) were part of the package of "sweeteners" blogged about here.

Thanks to that bill, many energy-saving tax breaks are available as long as the qualified energy-efficient home improvements are “placed in service” (that's IRS speak for the property being ready and available for use) by the end of 2009 for many of the more common upgrades and through 2016 for more advanced energy saving options.

The bad news is that the tax break for some of the more common upgrades are not available for the 2008 tax year. Those credits kick back in on Jan. 1, 2009.

Better tax breaks via credits: First, I've got to note that the energy related tax breaks are credits. I know that most of you already know that these usually are the best kind of tax breaks, but for new readers let me explain a bit.

A tax credit reduces your tax bill dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. If you owe the IRS $1,000 and are eligible for a $500 credit, your tax bill is cut in half.

If, however, you have $500 in deductions, that that amount is only good for a smaller tax reduction depending upon your tax bracket. If you're in the 25 percent bracket, $500 in deductions will translate to just $125 off you tax bill. Not bad, but not as good as a credit.

That means that many tax credits for IRS qualified home improvements to make your house more energy efficient are available for many common and relatively simple home improvements “placed in service” (that's IRS speak for when the property is ready and available for use) through 2009 and through 2016 for more advanced energy saving options.

Home improvement energy options and limits: In the "basic" category, you can choose from things ranging from additional insulation and a whole house fan to window film and completely new storm windows and doors.

The one downside to this renewal is that these simpler credits aren't available for the 2008 tax year. They become eligible again in 2009.

Also, keep in mind is that the total tax credit amount allowed a taxpayer (or two taxpayers if they are married filing a joint return) for the relatively simple energy improvements over the full credit term (tax years 2006, 2007 and 2009) is $500.

That means the hubby and I, who on our 2007 tax return claimed a $300 credit for our new air conditioning system, have only $200 in basic home energy-efficiency improvements we can claim on our 2009 return.

The table below gives you a general idea of the types of improvements and their limits that fall into the group of tax credits extended through 2009.

Basic Energy-Efficient Home Improvements
That Can Be Counted Toward the Tax Credit

Product Category	Product Type	Tax Credit Amount
Windows and Doors	Exterior Windows and Skylights	10% of cost, up to $200 for all windows, skylights and storm windows
Windows and Doors	Storm Doors	10% of cost, up to $500
Roofing	Metal Roofs and Asphalt Roofs	10% of cost, up to $500
Insulation	Insulation	10% of cost, up to $500
HVAC	Central A/C	$300
HVAC	Air Source Heat Pumps	$300
HVAC	Gas, Oil, Propane Furnace or Hot Water Boiler	$150
HVAC	Advanced Main Air Circulating Fan	$50
Water Heaters	Gas, Oil, Propane Water Heater	$300
Water Heaters	Electric Heat Pump Water Heater	$300

Also keep in mind that all these improvement materials and items must meet or exceed Energy Star program requirements.

The IRS says we consumers can rely on a manufacturer's certification that our energy efficient home improvement product meets the tax credit standards. Hang onto this certification as part of your tax records in case the IRS has any questions about your credit claim.

More work, more cost, more tax credit: More tax savings are allowed for more expensive improvements. The expanded Energy Policy Act provisions also give you more time to put these environmentally friendly upgrades in place and claim the associated tax credit, from 2008 and well beyond. They include:

Solar Energy Systems
Tax credits are available for qualified solar water heating and photovoltaic systems.

The credits are available for systems placed in service between Jan. 1, 2006, and Dec. 31, 2016. The tax credit is for 30 percent of the cost of the system, up to $2,000. This credit is completely separate from the $500 home improvement credit.

However, if you're considering a solar home energy system, you might want to wait. Beginning in 2009, the $2,000 cap will be removed for photovoltaic systems, but not solar water heaters.

Small Wind Energy Systems
Tax credits are available to homeowners who install residential small wind turbine systems. The credits are available for systems placed in service between Jan. 1, 2008, and Dec. 31, 2016.

As with the solar credit, the wind energy tax credit is for 30 percent of the cost of the system, up to $500 for each half kilowatt of capacity with an overall maximum of $4,000.

Fuel Cells
And another tax credit of up to 30 percent of the cost of fuel cells is available for such systems put in place between Jan. 1, 2006, and Dec. 31, 2016. The limit here is up to $1,500 per 0.5 kilowatt of capacity maximum. This credit is not limited to the $500 home improvement cap.

Much more information on these credits is available at this special Energy Star federal tax credits page.

Electric meter photo courtesy of gracey and morgueFile.com