Tax Credits for Energy-Efficient Improvements

Making energy-efficient home improvements might be well worth your time – and dime! If you can come up with the money to make a few changes in your home, you could reap substantial savings from both tax credits and lower energy bills.

Thanks to the 2009 stimulus package, you might be eligible for tax credits, which usually are more valuable than tax deductions. How so? A deduction reduces taxable income based on your tax bracket; a credit gives you 100% of the credit back and is not income based.

For example: If you’re in the 35% tax bracket, a $1,000 deduction reduces your tax bill by $350. But a $1,000 tax credit reduces your tax bill by the full $1,000. So to get the most bang for your buck, you claim the credit when filing your federal income tax return.

Tax credits are available for 30% of the cost of the following energy-efficient home improvements, up to $1,500 through 2010 for existing primary homes only:

• Energy-efficient furnace, air conditioner, heat pump or boiler
• Insulation
• Skylights and storm windows and doors
• Non-solar water heater
• Roofs (asphalt and metal)
• Biomass stoves

Tax credits are available for up to 30% of the cost of the following energy-efficient improvements, with no maximum dollar amount, through 2016 for existing primary homes, new home construction, rentals and secondary homes:

• Geo-thermal (ground source) heat pump
• Solar panels
• Solar water heater
• Small wind energy system

For complete information on energy-efficient improvements, tax credits and qualifications, visit any one of the following websites:

1. Energy Star at energystar.gov
2. Alliance to Save Energy at ase.org
3. Weatherization Source at weatherizationsource.com