In an effort to help promote alternative energy and energy conservation, the federal government is offering some tax credits to people who buy certain products like insulated windows, energy-efficient heat pumps and hybrid cars.

In August of 2005 the federal government passed the Energy Policy Act, and the resulting tax credits went into effect January 1 of 2006. Not only are energy-efficient products rewarded, but certain building techniques and materials are too.

So you save money on energy bills and pay less to Uncle Sam too. Sounds like a win-win.

"By reducing overall energy demand one family or business at a time," said U.S. Energy Secretary Samuel Bodman, "we are also increasing America's energy security." The program has the additional bonus of being environmentally conscious.

So how exactly does the program work? It provides tax credits for your federal return. Say you bought a new hybrid car or had your windows replaced with insulated ones. When April 15 rolls around, you note the purchase on your taxes, take the credit and it reduces the amount of tax you pay.

Remember that tax credits are different from tax deductions. A tax deduction is subtracted from your income before your tax is calculated. A tax credit is whacked off the tax you have been calculated to pay.

Credits usually account for better savings than deductions. Tax credits allow you to pay less taxes than the person with the same amount of taxable income who did not buy the car.

Tax credits are also available for energy-efficient home improvements like installing insulation, certain types of windows and roofing, and solar energy equipment. Needless to say, since it's a government program they're lots of rules and regulations. For a more detailed list, visit the program's website at www.ase.org/taxcredits.

If you need even more information, details for saving money on taxes is available at www.energytaxincentives.com.

Currently, these incentives are only available through the years 2006 and 2007 unless Congress extends them. Write to your Congressman today and tell him or her to vote to extend the act and then start taking advantage of it!