Residential Energy Improvements Eligible for Tax Credits

February 03, 2009

Photo of a light pink residential home with twelve solar panels installed on the rooftop.

At the beginning of 2009, the federal tax credits for energy efficiency improvements to homes were reinstated. The original tax credit expired at the end of 2007, and was reinstated as part of the Emergency Economic Stabilization Act of 2008. Federal tax credits are now available for 10% of the cost of insulation, storm doors, and ENERGY STAR®-qualified "cool roofs," up to $500; for 10% of the cost of exterior windows and skylights, up to $200; for up to $300 on new high-efficiency air conditioners, heat pumps, water heaters, and corn-fueled stoves; and for up to $150 on high-efficiency furnaces and boilers. Those tax credits expire at the end of this year, but there's also a tax credit for 30% of the cost of ENERGY STAR-qualified geothermal heat pumps, up to $2,000, and that doesn't expire until 2016.

The Emergency Economic Stabilization Act also extended a federal tax credit for 30% of the cost of residential and commercial solar energy installations, and eliminated a $2,000 cap on the tax credit for residential solar electric installations. The law also established a tax credit for 30% of the cost of residential wind energy systems, fuel cells, and microturbines, with different caps on each type of system. All these are good through 2016. The solar investment tax credit provisions will also allow filers of the Alternative Minimum Tax to take the tax credit, although anyone planning to file for a tax credit should first seek the advice of a tax professional. For general information about residential and commercial tax incentives, visit the EERE Building Technologies Program Financial Opportunities page. For specific information about residential credits, see the detailed chart on the ENERGY STAR Web site.