Economic Stimulus Bill and Energy Tax Credits
Financial Incentives for Lowering Utility Bills with Energy Star
Mar 1, 2009
One of the key points was extending the existing 2009 tax credits to 2010. The general theme of the changes is to encourage green building practices, conserving energy, and reducing carbon emissions. There is also a tax credit available for plug-in hybrid vehicles (cars or trucks).
Note that just carrying an Energy Star sticker does not qualify an appliance or product for a tax credit. Before shopping, research which appliance will bring the greatest financial reward.
Direct Effects Of the Stimulus Bill on Tax Credits
- As mentioned above, the existing ones are extended to 2010 and modified as needed.
- The previous $200 cap on window upgrades has been removed.
- Tax credit has gone up from 10% to 30%.
- Previous tax credits that were qualified by a specific dollar amount are now to be qualified by 30% of the cost.
- The maximum credit amount has been raised from $500 to $1500 for the two years: 2009 and 2010. Note however, that this limit does not include solar water heaters or pumps, electricity-producing wind turbines, solar panels, fuel cells, and geothermal heat pumps, indicating that they are being pushed as low carbon footprint home improvement projects.
Tax Credits for Home Improvement Projects
Just like for income tax deductions, homeowners must maintain records. This means saving the Energy Star labels that come on windows, all sales receipts, as well as any manufacturer's certification statements. Also:
- All products must be place in service between January 1, 2009 and December 31, 2010.
- Products or energy-saving appliances must have been installed in the taxpayer's primary residence.
- For 2009 and 2010, the tax credit cap for home improvements is $1,500.
- Oddly, on new home construction, no credit may be taken for insulation, energy efficient roofing, non-solar water heaters, air conditioning and heating systems, windows, and doors.
Green Tax Credits: The Fine Print
There's fine print with most things and this is no exception. The technology involved with energy conservation is evolving, so incentives are getting more particular. It always pays to do some homework prior to signing the check. Here are some highlights of what's needed to qualify.
- Exterior doors: Must have a U factor of 0.30 or less. (The U factor is a measure or impedance to heat transfer.)
- Skylights and energy-efficient windows: Must have a U factor of 0.30 or less.
- Composition asphalt shingle or metal roofs: Must have a basic Energy Star rating.
- Central air conditioners: SEER rating of 16 and above for split systems or 14 and above for package systems.
- Heat pumps: SEER rating of 15 and above for split systems, 14 and above for package systems.
- Geothermal heat pump: Minimum EER of 14.1 for closed-loop, 16.2 for open-loop, 15.0 for direct expansion.
- Solar water heater: Half of the home's energy usage for hot water must come from the sun. Usage for swimming pools and hot tubs does not qualify.
- Fuel cells: Efficiency of 30% or above and a minimum capacity of 0.5 kW.
The bottom line is that homeowners can enjoy some real savings when upgrading or remodeling, but to claim the tax credit, careful homework and record-keeping must be done.
Reference: www.energystar.gov
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