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Regional Environmental Council of Central Massachusetts
P.O. Box 255
Worcester, MA 01613
Tel: 508-799-9139
Fax: 508-799-9147
Email: recouncil[at]recworcester.org

Location: 9 Castle St #1
Worcester, MA 01610
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Tax Deductible Option
 
Why Are Some Choices Tax Deductible?
The premiums paid for renewable electricity are similar to charitable contributions. Those consumers who support renewable electricity do so because they will benefit society as a whole rather than to receive any personal advantage. The benefits are enjoyed by everyone, whether or not they themselves purchase renewable electricity. Those benefits—potentially including a clean environment, greater diversity of energy sources, and increased energy security—are called public goods in contrast to “private benefits.”
 
Just because the premium payments are charitable contributions in an economic sense does not automatically make them tax deductible. There are several hurdles that must be overcome for a transaction to qualify for a tax deduction. Payments through the CLEAN ENERGY CHOICESM program are tax deductible based on a Private Letter Ruling the Massachusetts Technology Collaborative ( MTC) received from the United States Internal Revenue Service (IRS). If you want to learn more about this ruling, you can read about the argument MTC presented to the IRS and the IRS’s Private Letter Ruling in response to the MTC argument.
 

When Are Premiums Paid to Suppliers Tax Deductible?
One renewable energy supplier, Mass Energy Consumers Alliance, chose to offer three different tax deductible choices for consumers. This means that, if a consumer itemizes deductions on their federal taxes, that portion of their payment that goes to new renewables is deductible. Learn more about how the price of Mass Energy's tax deductible choices compare to non- tax deductible choices from other suppliers.

How Can a Federal Tax Deductible Product Lower Your Price?
At the end of each year, MTC lets participants know how much they contributed over the year and how much went towards the purchase of new renewables and therefore is deductible on their federal income taxes. Those consumers who itemize deductions can count this amount as a tax-deductible charitable contribution.

For example:
Let’s assume you choose to purchase the New England GreenStart 100% product and that this costs you $12 per month or $144 per year. Of this amount 54% is tax deductible. If your tax rate is 28% than you will be able to recognize about $22 in savings if you itemize charitable deductions on your federal tax return. In this case, your cost after the deduction is $122 (note: you will be provided with a letter confirming the exact amount you are eligible to deduct for the previous calendar year).

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Last Updated 02/21/08