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If you purchase an energy-efficient product or renewable energy system for your home, you may be eligible for a federal tax credit. Included in this article is an overview of the federal tax credits for energy efficiency from the U.S. Department of Energy.
Certain products are eligible for tax credits at 30% of the cost, up to a total credit of $1,500. However, they must be "placed in service" from January 1, 2009 through December 31, 2010. Note that the $1,500 maximum limit is for all of the efficiency measures combined over the two year 2009-2010 period. You can purchase up to $5,000 worth of products over the two years and get 30% or $1,500 as a tax credit.
If you get the full $1,500 tax credit in 2009, you are not eligible for a tax credit on these products in 2010. The maximum does not apply to geothermal heat pumps, solar energy systems, wind energy systems, and fuel cells, which have no upper limit and are eligible for tax credits through 2016. You can receive both the tax credit capped at $1,500 and the tax credit for products with no upper limit.
Following is a list of products that are eligible for tax credits through 2010, along with the specific information for each product.
Biomass Stoves, HVAC, Insulation, Roofing, Windows and Doors
Credit: 30% of cost, up to $1,500
When and Where:
- 2009 and 2010 only
- Primary residence only
- Existing homes only
Water Heaters (non-solar) –
Credit: 30% of cost, up to $1,500
When and Where:
- 2009 and 2010 only
- Primary residence only
The following products are eligible for tax credits through 2016. Tax credits for these products are available at 30% of the cost, with no upper limit, through 2016.
Geothermal Heat Pump, Solar Energy Systems, Wind Energy Systems
Credit: 30% of cost, with no upper limit
When and Where:
- Must be "placed in service" by December 31, 2016
- Primary residences. Vacation homes eligible for partial credit; no rentals.
- New and existing homes
Fuel Cells -
Credit: 30% of cost, up to $500 per .5 kW of power capacity
When and Where:
- Must be "placed in service" by Dec. 31, 2016
- Primary residence
- New and existing homes
Vehicle Tax Credits –
Tax credits are also available for some vehicles.
Credit: Varies
When and What:
- Hybrids and Hybrid Combinations
- Credits phased-out after certain number of vehicles are sold.
You may be eligible for additional incentives. The tax credits listed here are federal tax credits. These can be combined with other state, local, and utility incentives. Visit the Database of State Incentives for Renewables and Efficiency to find out if you are eligible for other incentives.
If you are purchasing appliances, learn about the state rebates for ENERGY STAR appliances. You can also visit these other related links: Tax Incentives Assistance Project and ENERGY STAR Summary of Federal Tax Credits for Energy Efficiency
Note: This summary is for informational purposes only and should not be considered official tax information. Please see the IRS web site for official tax guidance.
Janine Rywak
County Extension Director
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