"Energy tax credit is basically an incentive program promoted by the US government in order to promote a healthy environment. This benefit is given to people who use alternative methods of energy either for cooling or heating their homes. In case a citizen is eligible for energy tax credit, it reduces the amount of income tax one has to pay on a dollar-for-dollar basis. To put in brief, a tax reduction only reduces the amount of income that is taxable, so in case one becomes eligible for energy tax credits, it can save a lot of money. Instances when a citizen is eligible for energy tax credits include installation of solar electric panels or solar water heaters. However, the tax credit is applicable when one makes improvement to one’s home and at the same time it is also available to second houses. In the energy tax credit system one directly takes the amount off the tax payment."