In 2006, Walden clients may benefit from several tax-saving opportunities. The contribution limits have increased on most retirement vehicles and on tax free gifts to individuals. Of particular interest may be provisions of the Energy Policy Act of 2005 that provide consumer tax incentives for purchasing advanced energy-saving technologies. Instead of providing a tax deduction, which lowers your taxable income, the Act reduces the amount of tax you owe in the form of a credit on your 2006 return. The new law provides tax credits for making your principal residence more energy efficient and for buying certain energy efficient items. The law also provides credits for alternative motor vehicles, including hybrids. For example, the estimated tax credit on a Toyota Prius is $3,150.

Detailed information regarding the tax credits provided by the Energy Policy Act is available on the Tax Incentives Assistance Project’s (TIAP) website at www.energytaxincentives.org. TIAP is sponsored by a coalition of public interest nonprofit organizations as well as governmental agencies and other leaders in the energy efficiency field. There are specific criteria that must be met in order to qualify for the credits. In addition, some approved credits may be reduced or even eliminated for individuals subject to the Alternative Minimum Tax. We strongly advise that you consult with your tax accountant or tax advisor before making any purchases in an effort to qualify for any of the allowable credits.

—S. Benevento, CFP^®