You asked for a description of (1) tax incentives for conservation measures, energy saving appliances, and hybrid vehicles and (2) current state legislative proposals in these areas.

A variety of efficiency products, including insulation, programmable thermostats, and energy efficient windows, furnaces, and boilers, are exempt from the state sales tax until June 30, 2007. There are also federal income tax credits for taxpayers who install certain energy efficiency improvements in 2006 or 2007. The state and federal incentives overlap to a large extent, and a consumer is eligible for the state sales tax exemption and the federal tax credit for measures that meet the eligibility criteria of both laws. Federal law also provides tax credits for builders of energy efficient homes and tax deductions for corporations that make energy efficiency improvements to commercial buildings.

State law exempts hybrid cars that have a highway efficiency rating of at least 40 miles per gallon (mpg) from the sales tax until October 1, 2008. Federal law provides a tax credit for light-duty hybrid vehicles based on their improved fuel economy and their life-time fuel savings potential. The current credits range from $ 250 to $ 3,000, depending on the vehicle's make and model.

At least five bills that have been favorably reported by legislative committees would expand the existing state incentives. Among other things, these bills would establish a (1) local option property tax exemption for hybrid vehicles, (2) sales tax exemption for compact fluorescent lights, and (3) sales tax exemption, until June 30, 2008, for appliances that meet federal Energy Star standards. One bill would make permanent the sales tax exemption for energy efficiency goods. In contrast, one bill would eliminate the current sales tax exemption for hybrid vehicles as part of systematic changes to the sales tax.

The following products are exempt from the sales tax until June 30, 2007: (1) insulation, programmable thermostats, water heaters and water heater blankets, window film, window and door weather strips, and caulking; (2) natural gas and propane furnaces and boilers that meet federal Energy Star standards; (3) windows and doors that meet federal Energy Star standards; (4) oil furnaces and boilers that are at least 85% efficient; and (5) ground-based heat pumps that meet the minimum federal efficiency rating. Further information about the Energy Star standards, including a list of products that meet them, can be found at www. energystar. gov.

Current law exempts from the sales tax hybrid passenger cars purchased before October 1, 2008 that have a highway mileage rating of 40 mpg.

The Energy Policy Act of 2005 provides federal income tax credits for homeowners who make energy improvements from January 1, 2006 through December 31, 2007. The eligible measures include:

1. added insulation to walls, ceilings, or other parts of the building envelope;

2. energy-efficient replacement windows;

3. high-efficiency gas, oil, and propane furnaces and boilers;

4. high-efficiency central air conditioning units, including air-source and ground-source heat pumps;

5. high-efficiency fans for heating and cooling systems; and

6. high-efficiency water heaters, including heat pump water heaters.

The credits are (1) 10% of the cost of added insulation, up to $ 500; (2) 10% of the cost of replacement windows, up to $ 200; (3) $ 150 for qualifying furnaces and boilers; (4) $ 300 for qualifying air conditioning units; (5) $ 50 for qualifying heating fans and cooling systems; and (6) $ 300 for qualifying water heaters. The maximum amount of homeowner credit for all improvements combined is $ 500 during the two-year period of the tax credit.

The act also provides tax credits for builders of energy efficient homes. Builders are eligible for a $ 2,000 tax credit for a new energy efficient home that achieves 50% energy savings for heating and cooling over the 2004 International Energy Conservation Code and supplements. At least 20% of the energy savings must come from building envelope improvements (e. g. , window replacements). There is a similar provision for energy efficient manufactured homes manufacturers. The tax credits apply to qualified new homes built or produced from January 1, 2006 through December 31, 2007. Further information about the tax credits is available at http: //www. energystar. gov/index. cfm?c=products. pr_tax_credits#2.

In addition to the tax credits, the Energy Policy Act provides tax deductions for corporations that make energy efficiency improvements to commercial buildings. The deduction is $ 1. 80 per square foot for owners of new or existing buildings who install measures that reduce the building's total energy and power costs by 50% or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90. 1-2001. These measures can include (1) interior lighting; (2) building envelope; or (3) heating, cooling, ventilation, or hot water systems. Deductions of $ 0. 60 per square foot are available to owners of buildings in which individual lighting, building envelope, or heating and cooling systems meet target levels that would reasonably contribute to an overall building savings of 50% if additional systems were installed. Further information about these incentives is available at http: //www. dsireusa. org/library/includes/incentive2. cfm?Incentive_Code=US40F&State=Federal&currentpageid=1&ee=1&re=1.

Federal law provides a tax credit for light-duty hybrid vehicles based on their improved fuel economy and their life-time fuel savings potential. The current credits range from $ 250 to $ 3,000, depending on make and model. Further information about this credit is available at http: //www. eere. energy. gov/afdc/laws/tax_credits. html.

Table 1 lists bills that would modify energy tax incentives that have been favorably reported by various committees this session.

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