Energy Efficiency Tax Credit

The Tax Incentives Assistance Project (TIAP), sponsored by a coalition of public interest nonprofit groups, government agencies, and other organizations in the energy efficiency field, is designed to give consumers and businesses information they need to make use of the federal income tax incentives for energy efficient products and technologies passed by Congress as part of the Energy Policy Act of 2005 and subsequently amended several times.

Update as of 1/10/11 -

Congress passed, and the President signed, the tax legislation described below in mid-December. To find out more about the changes, see individual pages in the left sidebar. TIAP has also compiled a fact sheet with information about the relevant energy efficiency tax incentives for 2010 and 2011.

Update as of 12/16/10 – Congress About to Extend And Modify Energy Efficiency Tax Incentives for Appliances, New Homes and Retrofits to Existing Homes

Today, or shortly thereafter, Congress is likely to complete action on tax legislation that modifies and extends three energy efficiency tax incentives, as a part of a much larger tax package. These tax incentives will continue to help raise the market share of efficient appliances, HVAC and insulation products, and new homes.

The legislation extends the new homes tax credit to cover 2010 and 2011 – this $2000 credit goes to the home builders and is for homes that use no more than half the energy of homes that just meet the 2003 national model energy code. The credit expired at the end of 2009 but the new bill extends this to cover new homes that are built in 2010 and 2011.

The bill also extends and updates manufacturer appliance tax credits for 2011 – the credit, which goes to manufacturers directly, is extended for one year, and the following criteria now apply:

• Dishwashers –
  • $25  - models using no more than 307 kilowatt hours/year and 5.0 gallons of water/cycle (this is the ENERGY STAR level effective July 1, 2011)
  • $50 - models using no more than 295 kilowatt hours/year and 4.25 = gallons of water/cycle
  • $75 - models using no more than 280 kWh kilowatt hours/year and 4 gallons of water/cycle
• Clothes Washers –
  • $175 – top-loading models that meet/exceed 2.2 MEF, and does not exceed 4.5 WCF
  • $225 – top-loading models that meet/exceed 2.4 MEF, and does not exceed 4.2 WCF, or front-loading models that meet/exceed 2.8 MEF and do not exceed a 3.5 WCF
• Refrigerators –
  • $150 – models that use 30% less energy relative to federal standard
  • $200 – models that use 35% less energy relative to federal standard

The legislation extends the 25C heating and cooling equipment and building envelope tax incentives for another year but at reduced levels. The new bill extends eligibility to the end of 2011, but reduces the incentive to the original 10% up to $500.  Included are provisions which:

• limit window incentives to $200;
• limit oil and gas furnace and boiler incentives to $150, plus an additional $50 for efficient furnace fans;
• limit water heater and wood heating system incentives to $300;
• loosen the qualification for window incentives (ENERGY STAR windows now qualify);
• and tighten the specifications for oil furnaces and boilers and gas boilers to 95% efficiency, up from the 90% efficiency in current law.

Congress is likely to consider further extensions of these incentives into 2012 and beyond next year, and TIAP will provide updates as they become available.  The existing homes incentives are likely to receive a major overhaul, and there are also likely to be discussions about improving incentives for energy-efficiency investments in commercial buildings, incentives which under current law continue until the end of 2013.

While Congress extended most of the expiring federal energy efficiency tax incentives, they did not extend the incentive for hybrid trucks and buses.

IRS Forms

• Residential Energy Efficient Property: Form 5695
• New Homes: Form 8908
• Vehicle Incentives: Form 8910
• Commercial Solar Incentives: Form 3468 (Investment Credit)

Note: The links above go to the IRS web site. TIAP makes every effort to keep these links up to date. IRS often does not publish new versions of forms until the beginning of the following tax year.

Additional Resources

TIAP Flyers for Residential and Commercial Incentives - Add your organization's logo and distribute at your next event to spread the word about energy efficiency incentives.

Some additional information on tax incentives can be found HERE!

Extension Service Home Energy Community of Practice Webinar - Presentation by Jen Amann, ACEEE (4/10/2009)

Overview of Federal Energy Efficiency Tax Incentives passed as part of the American Recovery and Reinvestment Tax Act of 2009
*Updated matrix of energy efficiency incentives

RESNET has completed a survey of rating providers regarding the number of homes that their raters certified for the federal tax credit (2007 only). 23,702 homes were certified by RESNET during 2007, which is triple the number of homes certified in 2006. For more information, click here.

NREL Energy Savings Modeling and Inspection Guidelines for Commercial = Building Federal Tax Deductions (1.9 MB PDF)

All content copyright © 2005-2009 Tax Incentives Assistance Project (TIAP). All rights reserved.

* While we have made great effort to describe these tax incentives accurately, we cannot provide tax advice and suggest you contact a tax professional with any questions specific to your situation.

Qualifying Mechanical Energy Systems product:

High-Efficiency Heating & Cooling Equipment

Luxaire® is a division of the Johnson Controls Company — a large supplier of heating, ventilating, air-conditioning, and refrigeration products in the U.S., and a leading international supplier. Their quest for top technology is evident, the Luxaire line of energy-efficient residential heating and cooling systems is not just "Setting the Performance Standard" through better technology. Mechanical Energy Systems along with Luxaire are committed to giving you the "Performance Promise" of superior service and support. Efficient, reliable heating and cooling solutions makes Luxaire the smart choice for homeowners. Contact Mechanical Energy Systems to upgrade your home heating and cooling systems for energy saving, rebates, and Federal Tax Credits.

30% up to $500 for Qualifying Equipment:

• 95+% efficient furnace
• 16 SEER or above air conditioners

Solatube®

The New Choice in Daylighting
Solatube International, Inc. the worldwide leading manufacturer and marketer of Tubular Daylighting Devices (TDDs), announces its new eChoice Daylighting System that sets the bar for energy efficiency. Learn more about the new Solatube 160 DSe and 290 DSe Daylighting Systems.

Breakthrough Thermal Performance
The performance standards established in the American Recovery and Reinvestment Act of 2009 require skylight products to meet a maximum U-Factor rating of 0.30 and Solar Heat Gain Coefficient (SHGC) of 0.30. In response to this challenge, Solatube eChoice products were designed to exceed this criteria. The choice is clear, Solatube 160 DSe and 290 DSe Daylighting Systems offer superior light performance with unrivaled energy efficiency.

Save 30% with Federal Tax Credits
By installing Solatube eChoice Daylighting Systems, you may receive a tax credit of 30% of the product cost of each Solatube eChoice Daylighting System, up to $1500.

Renewable Energy Tax Credit

Note: The American Recovery and Reinvestment Act of 2009 does not allow taxpayers eligible for the residential renewable energy tax credit to receive a U.S. Treasury Department grant instead of taking this credit.

Established by the federal Energy Policy Act of 2005, the federal tax credit for residential energy property initially applied to solar-electric systems, solar water heating systems and fuel cells. The Energy Improvement and Extension Act of 2008 (H.R. 1424) extended the tax credit to small wind-energy systems and geothermal heat pumps, effective January 1, 2008. Other key revisions included an eight-year extension of the credit to December 31, 2016, the ability to take the credit against the alternative minimum tax, and the removal of the $2,000 credit limit for solar-electric systems beginning in 2009. The credit was further enhanced in February 2009 by The American Recovery and Reinvestment Act of 2009, which removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.

A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the U.S. used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for onsite preparation, assembly, or original system installation and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The maximum allowable credit, equipment requirements, and other details vary by technology as outlined below.

Qualifying Mechanical Energy Systems product:

Solar
Hot Water Heating

Harvest the free energy of the sun with Mechanical Energy Systems' state-of-the-art solar water-heating system (SRCC certified) is designed to pre-heat domestic water that is supplied to your conventional water heater, resulting in remarkable savings. Learn more

Domestic hot water is the second-highest energy cost in the typical household. For some homes, it can even be the highest energy expenditure. Solar water heating can now reduce your domestic water heating costs by as much as 70%.

Renewable Energy Tax Credit (expiration date:12/31/16)

Solar Water Heaters placed in service after 12/31/08:
no maximum

• Solar Residential -
  30% of cost on Solar installations of solar water heating systems.
  30% of cost on solar photovoltaic.
  
• Solar Commercial -
  30% of cost on Solar installations for qualifying equipment.

Solar Star

The Ideal Ventilation Solution

Solar Star, the leader in solar powered attic ventilation, brings you the most technologically-advanced, environmentally-friendly, ventilation solution today. Best of all, Solar Star brings you the solutions that cost nothing to operate. Imagine the savings.

By placing the unit where it is most effective, the highest point on the roof, it can properly circulate air and ventilate your attic space, transforming your home into a comfortable living environment (find out how). Powered by Solar Star's proprietary 10-watt solar panel, this breakthrough product has been designed to last season after season.

Click here for product specifications.

Save 30% with Federal Tax Credit
Take advantage of extra savings with a 10% Federal Tax Rebate, up to $200 (if the 2010 tax credit was not used) on all your Solar Star purchases.

Homeowners are eligible for tax credits for qualified photovoltaic systems purchased and installed between January 1, 2009 and December 31, 2016.

Solar Star® Attic Fans, both roof mount and conversion kits, qualify for the category solar energy systems: photovoltaic systems, under the definition below:

Property that uses solar energy to generate electricity for the residence and must meet applicable fire and electrical code requirements.