Federal Tax Credits for Consumer Energy Efficiency Home Improvements

If you purchase an energy-efficient product or renewable energy system for your home, you may be eligible for a federal tax credit. Below you will find an overview of the federal tax credits for energy efficiency.

Please note, not all ENERGY STAR qualified products qualify for a tax credit. ENERGY STAR distinguishes energy efficient products which, although they may cost more to purchase than standard models, will pay you back in lower energy bills within a reasonable amount of time, without a tax credit.
What You Need to Know

* What is included in the Federal Tax Credit?
* How do I apply for my Federal Tax Credit?
* Top ten Frequently Asked Questions

What is included in the Tax Credit?

Tax Credit:
30% of cost up to $1,500
Expires:
December 31, 2010
Details:
Must be an existing home & your principal residence. New construction and rentals do not qualify.

Biomass Stoves - Biomass stoves burn biomass fuel to heat a home or heat water. Biomass fuel includes agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers.

Requirements - Thermal efficiency rating of at least 75% as measured using a lower heating value.

Tax Credit includes installation costs.

Heating, Ventilating, Air Conditioning (HVAC)

Advanced Main Air Circulating Fan - An Advanced Main Air Circulating Fan is an efficient fan, or blower motor which blows the air that your furnace heats up through the duct system.

Requirements - Must use no more than 2% of the furnace's total energy. Note: If the fan is qualified, but the furnace is not, you will not be able to take 30% off the cost of the entire furnace. Ask your HVAC contractor to break out the cost of the fan in your bill. You can get a 30% tax credit on the cost of the fan alone.

Tax Credit includes installation costs.


Air Source Heat Pumps - Air Source Heat pumps offer an energy-efficient alternative to furnaces and air conditioners in moderate climates. Like your refrigerator, heat pumps use electricity to move heat from a cool space into a warm, making the cool space cooler and the warm space warmer. During the heating season, heat pumps move heat from the cool outdoors into your warm house; during the cooling season, heat pumps move heat from your cool house into the warm outdoors. Because they move heat rather than generate heat, heat pumps can provide up to 4 times the amount of energy they consume.

Requirements

Split Systems:
HSPF ≥ 8.5
EER ≥ 12.5
SEER ≥ 15

Package systems:
HSPF ≥ 8
EER ≥ 12
SEER ≥ 14

Tax Credit includes installation costs.

Central Air Conditioning (CAC) - Central Air Conditioning (CAC)The best way to find tax credit eligible CACs is to ask your HVAC Contractor (Heating Ventilation and Air Conditioning). To verify tax credit eligibility, ask your HVAC contractor to provide the Manufacturer Certification Statement for the equipment you plan to purchase. Or, search the Manufacturer's website for more information.

Requirements

Split Systems:
SEER ≥ 16
EER ≥ 13

Package systems:
SEER ≥ 14
EER ≥ 12

Tax Credit includes installation costs.

Gas, Propane, or Oil Hot Water Boiler - Gas, Propane, or Oil Hot Water Boiler. These are heating units that use water circulated throughout the home in a system of baseboard heating units, radiators, and/or in-floor radiant tubing.

Requirements

AFUE ≥ 90

Tax Credit includes installation costs.

Natural Gas or Propane Furnace - Natural Gas or Propane Furnace. A furnace uses the combustion of fuel and air to create heat.

Requirements

AFUE ≥ 95

Tax Credit includes installation costs.

Oil Furnace - An Oil Furnace uses the combustion of fuel and air to create heat.

Requirements

AFUE ≥ 90

Insulation - Adding adequate insulation is one of the most cost-effective home improvements that you can do.

Requirements

Typical bulk insulation products can qualify, such as batts, rolls, blow-in fibers, rigid boards, expanding spray, and pour-in-place.

Products that air seal (reduce air leaks) can also qualify, as long as they come with a Manufacturers Certification Statement, including:
+ Weather stripping
+ Spray foam in a can, designed to air seal
+ Caulk designed to air seal
+ House wrap

Tax Credit does NOT include installation costs. But, you can install the insulation/home sealing yourself and get the credit.

Roofs (Metal & Asphalt) - Qualified roof products reflect more of the sun's rays, which can lower roof surface temperature by up to 100F, decreasing the amount of heat transferred into your home.

Requirements

"Metal roofs with appropriate pigmented coatings" and "asphalt roofs with appropriate cooling granules" that also meet ENERGY STAR requirements.

Tax Credit does NOT include installation costs.

Water Heaters (non-solar) - Gas, Oil, Propane Water Heater - Gas, Oil, Propane Water HeaterWater heating can account for 14%–25% of the energy consumed in your home.

Requirements

Energy Factor ≥ 0.82 OR a thermal efficiency of at least 90%.

Tax Credit includes installation costs.

Electric Heat Pump Water Heater - Electric Heat Pump Water HeaterWater heating can account for 14%–25% of the energy consumed in your home.

Requirements

Energy Factor ≥ 2.0

Windows, Doors, Skylights - Windows, Doors, SkylightsEnergy efficient windows, doors and skylights can reduce energy bills.

Requirements

U factor <=0.30
SHGC <=0.30

Tax Credit does NOT include installation costs.

Storm Windows & Doors - Storm Windows & DoorsA less expensive approach to replacing old windows/doors, is to use storm windows to improve energy efficiency. When installed in combination with older, less efficient window/door, storm windows/doors can enhance efficiency by creating another barrier between the interior of you home and the weather outside.

Requirements

In combination with the exterior window/door over which it is installed:
+ U-factor and SHGC of 0.30 or below
+ Must meet the IECC

Tax Credit does NOT include installation costs.

Tax Credit: 30% of cost with no upper limit
Expires: December 31, 2016
Details: Existing homes & new construction qualify. Both principal residences and second homes qualify. Rentals do not qualify.

Geothermal Heat Pumps - Geothermal Heat PumpsGeothermal heat pumps are similar to ordinary heat pumps, but use the ground instead of outside air to provide heating, air conditioning and, in most cases, hot water. Because they use the earth's natural heat, they are among the most efficient and comfortable heating and cooling technologies currently available.

Requirements

Closed Loop:
EER ≥ 14.1
COP ≥ 3.3

Open Loop:
EER ≥ 16.2
COP ≥ 3.6

Direct Expansion:
EER ≥ 15
COP ≥ 3.5

Tax Credit includes installation costs.

Small Wind Turbines (Residential) - A wind turbine collects kinetic energy from the wind and converts it to electricity that is compatible with a home's electrical system.

Requirements

Must have a nameplate capacity of no more than 100 kilowatts.

Tax Credit includes installation costs.

Solar Energy Systems

Solar Water Heaters - Solar Water HeatersSolar water heaters come in a wide variety of designs, all including a collector and storage tank, and all using the sun's thermal energy to heat water. Solar water heaters are typically described according to the type of collector and the circulation system.

Requirements

At least half of the energy generated by the "qualifying property" must come from the sun. The system must be certified by the Solar Rating and Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed.

Note: The credit is not available for expenses for swimming pools or hot tubs. The water must be used in the dwelling.

Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement.

Tax Credit includes installation costs.

Solar Panels (Photovoltaic Systems) - Solar PanelsSolar Panels or Photovoltaic Systems are solar cells that capture light energy from the sun and convert it directly into electricity.

Requirements

Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement.
More Information
+ How to apply

Tax Credit:
Credit Details: 30% of the cost, up to $500 per .5 kW of power capacity
Expires:
December 31, 2016
Details:
Existing homes & new construction qualify. Must be your principal residence. Rentals and second homes do not qualify.

Fuel Cells (Residential Fuel Cell and Microturbine System)