Several readers have asked us about the tax incentives for being energy-conscious under the new economic stimulus law.

Strategy: Take action now. If you make energy saving improvements this year, you can cut your 2009 tax bill in addition to your heating and cooling bills. The new law changes may benefit both individual and business taxpayers.

What’s new for individuals?

For starters, the new law triples the residential energy credit to 30% of qualified expenditures (up from 10%). Furthermore, the lifetime $500 dollar cap is eliminated. It’s been replaced by a $1,500 credit for energy-saving installations made in 2009 and 2010. (The $1,500 limit is for 2009 and 2010 combined.)

The enhanced residential energy credit covers the following improvements:

• Insulation materials

• Exterior windows (including skylights)

• Exterior doors

• Central air conditioners

• Natural gas, propane and oil water heaters or furnaces

• Hot water boilers

• Electric heat pump water heaters

• Certain metal roofs

• Stoves

• Advanced main air circulating fans

The new law also removes the dollar caps for the separate credit for solar hot water property, geothermal heat pumps and wind energy property. Caveat: A $500 per 0.5-kilowatt hour of capacity applies to qualified fuel-cell property costs.

What’s new for businesses?

A building owner can claim a tax deduction of up to $1.80 per square foot of new or existing commercial buildings that meet certain conditions. Alternatively, partial deductions of up to 60 cents per square foot are available for eco-friendly improvements affecting the building envelope, lighting systems or heating and cooling systems.

Deductions may be claimed for property placed in service after 2006 and before 2014.

The new law includes other tax breaks for business owners. For instance:

• Your company can claim a 30% investment credit for electricity produced from renewable sources. The new law extends the placed in service date for qualified facilities for three years through 2012 (2013 for wind facilities).

• The new law modifies the business energy credit by eliminating the cap on small wind property. It also repeals the basis reduction requirement for subsidized energy financing.

• In lieu of claiming a production credit over a 10-year period, your company can elect to treat certain alternative energy facilities as energy property eligible for the investment credit. The election is available for qualified property placed in service after 2008 and before 2014 (2013 for wind property).