Home Energy Efficiency Improvement Tax Credit

What is it?

Stimulus incentives to improve home energy efficiency

The American Recovery and Reinvestment Act of 2009 (ARRA) includes federal tax credits for qualified home improvements. The tax credit is designed to motivate increased energy efficiency, create more "green" jobs, and to make it more affordable for Americans to invest in certain upgrades to their homes.

30% federal tax credit for certain upgrades made in 2009-2010

The official name of the tax credit is the "Non-Business Energy Property Tax Credit." It is available if you make qualified improvements to your existing home during the 2009 or 2010 federal tax years. The federal tax credit is a 30% of the purchase price, up to a maximum of $1,500. This tax credit is available only for qualified improvements made to primary residences. The credit can be used on a single qualified upgrade or multiple qualified upgrades, but the total credit cannot exceed $1,500. Installation costs are generally not eligible for the credit, except for certain HVAC (Heating, Ventilating, and Air Conditioning) upgrades.

Eligible upgrades may include windows, roofs, furnaces, and more

Qualified improvements may include the following:

  • Exterior doors
  • Exterior windows
  • Skylights
  • Roofs
  • Furnaces
  • Insulation
  • Non-solar water heaters
  • Heating and cooling systems

The qualified improvement must be purchased and placed into service between January 1, 2009 and December 31, 2010. If the upgrades are placed into service on or after February 17, 2009, they must meet the increased energy efficiency standards required by ARRA.

Renewable energy improvements may qualify for a 30% tax credit

Larger-scale qualified improvements made to existing homes or new construction may be eligible for the "Residential Energy Efficient Property Tax Credit." This is also a 30% tax credit, but it has no maximum dollar limit. Qualified improvements may include solar panels, solar water heaters, small wind energy systems, or geothermal heat pumps that are purchased and placed into service between January 1, 2009 and December 31, 2016. The purchase price and installation costs are generally eligible for the renewable energy tax credit.

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DOI Energy Policy

Straight from the Source

Click here to read the Energy Policy Act of 2005.

Click here and go to page 43 to read the Energy Improvement and Extension Act of 2008.

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The information contained herein is drawn from sources that are believed to be reliable, but it cannot be guaranteed as to completeness or accuracy. The content is not intended to be, and should not be relied upon as, tax, legal, or financial planning advice. Consult your tax advisor for specific advice.

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