Earth Day 2023 is April 22, and this year’s theme is Investing in Our Planet.
Taxes may not be the first thing that comes to mind when you think of the environment, but it’s important to highlight the benefits of some environmental taxes and credits, such as state gasoline taxes or non-business energy property credits.
One of the ways we can approach climate action is to reduce our carbon footprint. We thought it would be timely to see if there is a correlation between state-by-state gasoline tax rates and our carbon footprint, and explore what environmental choices we can make for our home lives in celebration of Earth Day 2023.
States with the highest gasoline taxes
Gasoline taxes vary greatly from state to state, as do the differences between prices per gallon in different regions.
Here are the ten states with the highest gas taxes (both the 18.4 cents per gallon federal tax and individual state and other taxes) in 2022:
- California: 86.55 cents/gal
- Illinois: 78.00 cents/gal
- Pennsylvania: 77.10 cents/gal
- Hawaii: 48.25 cents/gal
- New Jersey: 69.10 cents/gal
- Nevada: 68.88 cents/gal
- Indiana: 68.19 cents/gal
- Washington: 67.80 cents/gal
- New York: 66.62 cents/gal
- Michigan: 63.57 cents/gal
States with the lowest gasoline taxes
Here are the ten states with the lowest cumulative gasoline prices:
- Alaska: 33.53 cents/gal
- Mississippi: 37.19 cents/gal
- New Mexico: 37.28 cents/gal
- Arizona: 37.40 cents/gal
- Missouri: 38.32 cents/gal
- Oklahoma: 38.40 cents/gal
- Texas: 38.40 cents/gal
- Louisiana: 38.41 cents/gal
- Colorado: 40.40 cents/gal
- North Dakota: 41.40 cents/gal
Most cumulative emissions
Citizens and environmental scientists often wonder whether high gasoline taxes actually discourage driving and erode the state’s carbon footprint. The evidence is inconclusive, but we can look at the states with the highest and lowest cumulative emissions.
According to the US Energy Information Administration, the following ten states were the largest energy-related carbon dioxide emitters (as of 2016): Texas, California, Florida, Pennsylvania, Louisiana, Ohio, Illinois, Indiana, New York, Michigan.
Lowest cumulative emissions
The same study identified the following ten states as having the lowest emissions: District of Columbia, Vermont, Rhode Island, Delaware, New Hampshire, South Dakota, Maine, Idaho, Hawaii, Montana.
While 60 percent of the states with the highest gasoline taxes also make the list for the highest cumulative emissions, none of the states with the lowest gasoline taxes are on the list with the lowest cumulative emissions. Given these results, it is difficult to conclude that there is a direct correlation between gasoline taxes and carbon footprints. Moreover, gasoline tax revenues are ideally not allocated for transportation purposes, but are mainly spent on government needs.
Electric cars and credits
Good news if you bought a new, qualified plug-in electric vehicle or fuel cell electric vehicle (FCV). The good news is the $7,500 tax credit amount. Which means when you drive green, the IRS wants to get your green back. Under the Inflation Reduction Act, the Clean Car Credit covers new EVs, but has also been expanded for people buying used EVs up to $4,000. And while golf carts and go-karts are fun, these credits don’t cover those types of vehicles.
The amount of the new car credit will depend on when you put the car into service (when you deliver the car) regardless of the date of purchase. Both new and used vehicles must meet certain criteria to qualify.
If you own a clean new vehicle on or after April 18, 2023, it must meet critical mineral and battery components to qualify for the credit. This applies even if you bought the car before April 18.
Eligibility for the clean car credit also depends on your modified adjusted gross income (AGI) and the manufacturer’s suggested retail price (MSRP) for new vehicles and the selling price for used vehicles. A credit of up to $7,500 or $4,000 can mean big tax savings, especially since the tax credit saves you dollars on your taxes.
For a complete list of requirements, you can visit the IRS index to manufacturers’ websites.
Incentive for energy efficiency in your home
We all know that turning off the lights when you leave a room can save a lot on your electricity bill, and keeping a pulse on your thermostat during the summer and winter months can also make a big difference.
But, let’s think bigger! Maybe it’s time to consider home renewable energy systems as your next step towards a more down-to-earth lifestyle – nothing says green like renewable energy! And thanks to Uncle Sam, you can save a lot of green with energy-efficient tax credits for your home, too.
Non-Business Energy Property Credit
The non-business energy property credit is now called the energy efficient home improvement credit. As a result of the Inflation Reduction Act, the credit is now worth up to $1,200 per year on qualified property placed in service on or after January 1, 2023, and through January 1, 2033.
If you make energy-efficient improvements to your home (including adding energy-efficient roofs, windows, skylights, doors, etc.) by December 31, 2022, you can claim a non-business energy property credit for 10 percent. Amounts paid for qualified energy efficiency improvements up to $500 on your 2022 tax return.
Since the credit now has an annual limit (generally up to $1,200) rather than lifetime, you can spread your home improvements over the current 10-year term of the credit and receive $12,000 in tax credits. If you make qualifying investments in heat pumps and biomass stoves and boilers, you can also earn up to an additional $2,000 per year.
Credit for residential energy efficient property
If you install residential solar energy systems, solar fuel cells and wind turbine systems on your home between January 1, 2022 and December 31, 2032, you can claim a residential energy efficient property credit worth up to 30%. The cost of your renewable energy upgrade. Property placed in service between January 1, 2033 and December 31, 2034 may receive a reduced percentage rate. The credit percentage rate decreases to 26 percent for properties placed in service in 2033, to 22 percent for properties placed in service in 2034.
In addition to environmental taxes and credits, there are several lifestyle choices we can make now to make our homes more environmentally conscious:
Start a home garden to reduce waste
The good news is that almost anyone can have a garden (even if you think you have a black thumb).
The key is to know your garden location and your skill level. Container gardens are a fantastic way to start because you have a lot of control over the soil. And if you’ve never gardened before, choose easy-to-maintain plants like herbs and peppers.
If you really want to expand, carve out some space in your front or back yard and get ready this week after work. You can then take some seedlings and plant them this weekend. If you are more ambitious, you can start with seeds indoors and then transplant them when they are stronger and resistant to pests.
Gardens are not only a fun way to relax, but they can save you money in the long run. Instead of buying bags of mixed greens every week, you can pick exactly what you need minutes before you eat, and you’ll also avoid the food waste that can come with all those plastic bags from the grocery store!
Composting: Reuse your kitchen scraps
Want to make your vegetable garden really shine? How do you find fantastic organic material to feed your plants and grow your soil?
Create your own rich compost by saving your kitchen scraps (excluding milk and meat) and setting up a compost pile or bin outside in the backyard. If you have limited space due to living in an apartment or condo, you can still create a micro one right under your sink!
When you mix the waste with a coffee grinder, you can create a fantastic material. Note that a healthy compost pile will have a pleasant earthy smell as it decomposes. Not only do you reduce waste by creating your own compost pile, but you can save big by not buying more expensive organic fertilizers and soil conditioners at the store.
Speaking of kitchen waste, since you’re already greening and reducing waste by composting, reduce your waste even more by recycling. Sort those bottles, cartons, and boxes (we all know you have them) for recycling instead of throwing them in the trash.
Recycling may have been a more difficult habit at first, but now it has become second nature to us. Now it’s not unusual to fill trash cans for about three weeks rather than filling them weekly for recycling!
While we won’t be celebrating the Earth in large groups outside this year, there are many creative ways we can go green and show our appreciation and respect for the environment while saving money too!
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