Federal Tax Credit for Energy Efficiency

Federal Tax Credits for Energy Efficiency

How has the new Stimulus bill affected the tax credits for energy efficient home improvements?

On February 17, 2009, President Obama signed a stimulus bill (The American Recovery and Reinvestment Act of 2009) that made some significant changes to the energy efficiency tax credits. The highlights are:

The tax credits that were previously effective for 2009, have been extended to 2010 as well.
The tax credit has been raised from 10% to 30%.
The tax credits that were for a specific dollar amount (ex $300 for a CAC), have been converted to 30% of the cost.
The maximum credit has been raised from $500 to $1500 for the two years (2009–2010). However, some improvements such as geothermal heat pumps, solar water heaters, and solar panels are not subject to the $1,500 maximum.
The $200 cap on windows has been removed.

Click to visit the Energy Star Equipment Requirement Website

Frequently Asked Questions

Q. How do I calculate the tax credit on a furnace, central air conditioning or heat pump combination when all components do not qualify?

Q. Generally, when you buy a furnace it comes with a fan/motor - you don't buy it separately. If I buy a furnace that qualifies for the tax credit, does it also have to have a qualified "advanced main circulating fan" to get the full 30% credit? What if the furnace itself does not meet the criteria, but, the fan does, can I take the full 30% credit? If not, how is credit to be claimed on the fan alone?

Q. Is the $1500 tax credit for each improvement? Can I get $1500 for windows and another $1500 for a new HVAC system? Can I get $1500 in 2009 and another $1500 in 2010?

Q. What forms do I need for the energy efficiency tax credits?