The Energy Policy Act of 2005 (EPACT), signed by President Bush on August 8, 2005, offers consumers and businesses federal tax credits for purchasing fuel-efficient hybrid-electric vehicles and energy-efficient appliances and products.
Thanks to the Emergency Economic Stabilization Act of 2008, most of these tax credits which had expired at the end of 2007 will now be available for improvements made during 2009 and 2010. Of note, improvements made during 2008 are not eligible for the tax credit.
Consumers who purchased and installed specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in the home can receive a tax credit of up to $1500 for the 2009 and 2010 tax years.
The Internal Revenue Service (IRS) has provided guidance for consumers: IRS Notice 2006-26. ENERGY STAR® is studying IRS guidance.
On December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This law extends the tax credits for energy efficiency into 2011, BUT at lower levels. The levels revert back to those in effect in 2006 and 2007, which were 10% of the cost of the improvement, up to $500, with a $200 max for windows, and several other set maximums.
Below are the highlights of the tax credits and individual item limits, according to ENERGY STAR:
- 10% up to $500 for insulation, roofs, and doors.
- Windows capped at 10% up to $200, and must be ENERGY STAR qualified
- Natural gas furnace and boilers capped at 10% up to $150, and all furnaces and boilers must meet 95 AFUE
- 10% up to $50 for advanced main air circulating fan
- 10% up to $300 for qualified air conditioners, natural gas water heaters, and biomass stoves
- $500 lifetime limit. If you got over $500 in these tax credits from 2006-2010, you are not eligible for anything more.
To see if you qualify for a tax credit, consult your tax advisor. For a complete listing of tax credits, visit www.energystar.gov/taxcredits.
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