New Tax Credits for Energy Efficient Residential Upgrades

The Federal stimulus package passed last year includes new and expanded tax incentives for energy-efficient and renewable-energy home improvements. Up to $1500 in tax credits for adding qualifying windows, doors, insulation, roofs, heating and cooling equipment, water heaters, and even wood and pellet stoves to your house are available this year.

Expanded credits for installing solar technology, small wind-energy systems, or a geothermal system provide for a full 30% tax credit on qualifying expenditures, with no upper limit, through 2016. Unlike tax deductions, these incentives lower your tax bill dollar for dollar.

There are two types of credits being promoted: energy efficiency, which pertains to improving an existing home's structural elements as well as the purchase of high-efficiency heating, cooling, and water-heating equipment; and the renewable energy credit,  which includes solar, wind, geothermal, and fuel-cell technologies.

Energy-efficient appliances such as refrigerators, dishwashers, and clothes washers are not eligible, but the renewable-energy credit and a separate energy-savings incentive is applicable.

The single greatest change is the removal of the $2000 cap from the 30% renewable-energy credit for systems installed after 2008.

For the latest information on these credits, visit:

IRS Stimulus Package