Federal Energy Tax Credits

Are you planning energy improvement projects for your home? Consumers who purchase and install specific products such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment for the home can receive a one-time tax credit of up to $500 in total, beginning in January 2006.

Improvements must be installed in or on the taxpayer's principal residence in the United States. You can take these home improvement tax credits for improvements made between January 1, 2006 and December 31, 2007.

Here are some examples of anticipated tax savings for energy-efficient home improvements :

exterior windows (10% of cost, maximum $200)
furnaces or boilers ($150)
advanced main air circulating fans ($50)
heat pumps ($300)
central air conditioners ($300)
water heaters ($300)
exterior doors (10% of cost, maximum $500)
heat-reducing metal roof (10% of cost, maximum $500)
insulation (10% of cost, maximum $500)
solar water heaters and other photovoltaic property (30% of cost, max $2,000)

Building envelope components (such as wall, ceiling and basement insulation) must meet the requirements of the International Energy Conservation Code (IECC), a model energy code for buildings.

In addition, individuals and businesses who buy or lease a new hybrid gas-electric car or truck are can receive an income tax credit of $250 to $3,400 – depending on the fuel economy and the weight of the vehicle.

There are qualifications for each of these credits. We recommend reading more about the Energy Policy Act and the IRS interim guidance before claiming home energy efficiency tax credits.

We also recommend consulting a tax expert before purchasing or installing energy efficiency improvements for your home.

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