Federal Tax Credits for Consumer Energy Efficiency

Many home energy improvement upgrades provide you with a valuable tax credit.

by Don Ames

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.

Energy Saving Measures: Heating& cooling, insulation, appliances, air sealing, etc.

Federal Tax Credit: 30% of cost up to $1,500

Energy Producing Measures:  Geothermal, Solar and Wind.

Tax Credit:30% of cost with no upper limit

Details:

  • Must be an existing home & your principal residence. New construction and rentals do not qualify.
  • Must be installed and operational in 2010.
  • In most cases, must be installed by a certified tax credit professional.
  • Not all cost associated with an energy efficient project can be included in the 30% calculation.
  • Need to have a Federal tax liability in order to claim the credit.

Fuel Cells

Tax Credit:   30% of the cost, up to $500 per .5 kW of power capacity

Expires: December 31, 2016

How to apply:

  • Save your paid-in-full receipts from the certified Contractor.
  • Save the Manufacturer’s Certification Statement for your records.
  • Submit Form 5695 with your Federal taxes.

A tax credit is a very good thing to have. The tax credit covers your tax liability dollar for dollar. If you paid in $3,000 during 2010 in Federal income taxes and you have a $1,500 tax credit, the government will send you a check for $1,500. Wish I had a credit coming for saving energy at my house…

For more information about Federal Tax Credits, visit the Department of Energy web site, www.energystar.org, you will be glad you did.

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