Uncle Sam Wants YOU to Save Energy

First in a two-part series

Have you been wanting to green your home, but don’t have the green to do it? As part of the federal stimulus package, the government is offering a tax credit on various products that will help boost your home’s energy efficiency. The tax credit covers 30 percent of the purchase price—and, in some cases, the installation cost as well—of eligible products “placed in service,” or put into use, in existing primary residences (not new construction) between January 1, 2009, and December 31, 2010. The maximum credit you can receive for all qualifying products during this period is $1,500.

Here is a brief summary of basic eligibility requirements; because not all items in a category qualify for the tax credit, be sure to confirm product eligibility before you buy. The Energy Star website (see the Related Resources) provides more detailed information as well as resources to help you choose the right products for your home.

For these items, the tax credit applies only to the purchase price:

Windows and doors. All Energy Star-rated products installed before June 1, 2009, are eligible. After June 1, qualifying products must meet more stringent criteria, with a value of 0.3 or lower for both U-factor (heat transfer rate) and solar heat gain coefficient (fraction of incoming solar radiation admitted). Certain heat-blocking window films also qualify; eligible films must have a certification statement, available on manufacturers’ websites, noting their eligibility for the tax credit.
Insulation. Most types of bulk insulation (e.g., rolls, batts, blow-in) and air leak sealants (e.g., weather stripping, caulk) qualify. A manufacturer’s certification statement is required.
Roofing. All Energy Star-qualified metal roofs and reflective asphalt shingles are eligible. A manufacturer’s certification statement is required.

For these items, the tax credit applies to both purchase and installation costs:

Space heating and cooling systems. Central air conditioners, air-source heat pumps, furnaces, and boilers must meet specific efficiency criteria, which vary depending on the system and fuel type (see the Energy Star website for details).
Water heaters (non-solar). Gas-, oil-, and propane-fired units must have an energy factor (EF)—a measure of overall energy efficiency—of 0.82 or higher or a thermal efficiency rating (a measure of how effectively fuel is converted to heat) of at least 90 percent. Electric heat pump water heaters with an EF of 2.0 or higher qualify as well; conventional electric water heaters (storage or tankless) do not.
Biomass stoves. Units using plant-derived fuel (e.g., wood, wood pellets, grasses) with a thermal efficiency rating of at least 75 percent qualify. To reduce air pollution, choose the stove with the lowest emissions possible.

States and utilities may offer additional incentives (see the Related Resources below) for the products listed above, or for products not included in the federal tax program, allowing you to save even more money.

Second in a two-part series

We told you about the $1,500 federal tax credit for improving your home’s energy efficiency. To complement your energy conservation efforts you can tap into renewable energy to provide heat, hot water, and electricity—and save money in the process.

As part of the federal stimulus package, the government is offering a 30 percent tax credit for the cost and installation of eligible products “placed in service,” or put into use, in existing, new, or non-primary residences between January 1, 2009, and December 31, 2016. Unlike the energy efficiency tax credit, there is no upper limit to the renewable energy credit you can receive (unless otherwise noted below) and you can carry forward any unclaimed portion of the tax credit to future years through 2016. And best of all, the two tax credits are separate so you can be eligible for both at the same time.

Here is a brief summary of basic eligibility requirements; the Energy Star website (see the Related Resources) provides more detailed information as well as resources to help you choose the right products for your home.

Geothermal heat pumps. These highly efficient systems use the ground’s thermal energy (instead of fossil fuels) to heat and cool your home. All Energy Star-rated units qualify (including closed loop, open loop, and direct expansion systems), and water-to-water geothermal heat pumps purchased after December 1, 2009, are eligible as well.
Solar panels. All solar photovoltaic systems are eligible as long as they provide electricity to your home and meet applicable fire and electrical codes.
Solar water heaters. All Energy Star-rated units are eligible. However, qualifying systems must be certified by the Solar Rating Certification Corporation, a third-party performance-rating system. (For a list of eligible products, see the Related Resources.) They must also provide hot water only for use inside your house (not for swimming pools or hot tubs), and at least half of the energy used by the system to heat the water must be solar-generated.
Residential small wind turbines. Eligible systems require a maximum energy output no higher than 100 kilowatts.
Fuel cells. Fuel cells generate electricity from the reaction of hydrogen and oxygen, with water as the sole byproduct. Eligible systems must have an efficiency of at least 30 percent and a capacity of at least 0.5 kilowatt. The 30 percent tax credit is capped at $500 per 0.5 kilowatt of power capacity, and only systems installed in primary residences qualify.

States and utilities may offer additional incentives for the products listed above or those excluded from the federal tax program, allowing you to save even more money. To learn more about these incentives, or to read last month’s Greentips on the energy efficiency tax credit, see the Related Resources.

Related Resources
Energy Star—Federal Tax Credits for Energy Efficiency
Solar Rating and Certification Corporation—Certified Solar Hot Water Systems
Database of State Incentives for Renewables & Efficiency
Greentips—Uncle Sam Wants YOU to Save Energy