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. Those benefits—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.

Which Choices Are Tax Deductible?
The renewable energy suppliers, listed below, chose to offer tax deductible options for consumers. This means that if a consumer itemizes deductions on their federal taxes, up to 100% of their payment is deductible. The tax deductible amount is based on the proportion of new renewable energy in the product.

How Does the Tax Deduction Work?
At the end of each year, MTC lets participants know how much they contributed over the year and how much is deductible on their federal income taxes. The amount of their contribution reflects how much went towards the purchase of new renewables. Those consumers who itemize deductions can report this amount as a tax-deductible charitable contribution.