In The News
ARRA
2009-Economic Stimulus Bill
Weatherization Assistance and
Energy Efficiency Tax Credit
Information
Weatherization
Assistance
Energy Efficiency Tax Credits
Additional Information
Energy Efficiency Tax Credit Available Under the American
Recovery and Reinvestment Bill of 2009
EPACT 2005 and
ARRA 2009
Tax Credits for Energy Efficiency
Home Shell: Insulation, Windows, Sealing
What is the tax credit for existing homes?
Please note that these incentives have changed as of February 17, 2009.
Existing homes are eligible for a series of efficiency measures that
pertain to the home envelope, worth 30% of the installed cost (materials
only, labor is not included in the credit basis). There is a $1,500 cap
on the credit per home, including the amount received for heating,
cooling, and water heating equipment.
These credits are available for systems placed in service from January
1, 2009, through December 31, 2010.
What is eligible for the federal tax credits?
Eligible measures are:
• Added insulation to walls, ceilings, or other part of the building
envelope that meets the 2009 IECC (& supplements) specifications.
• Replacement windows and skylights, and exterior doors which are
equal to or below a 0.30 U factor and a Solar Heat Gain Coefficient
(SHGC) of 0.30. Storm windows that meet the IECC in combination with
their paired external window are eligible (taking into account the
applicable climate zone). Storm doors paired with U-factor rated wood
doors are eligible provided they do not exceed the default U-factor
requirement for the combination. See the 2009 IECC for details.
• Window films certified by the manufacturer that the product meets
the requirements of a "qualifying insulation system."
• Sealing cracks in the building shell and ducts to reduce
infiltration and heat loss - these should be sealed so as to be
consistent with the 2009 IECC.
• Pigmented metal roofs, or an asphalt roof with cooling granules
must meet Energy Star requirements.
Manufacturers and retailers should be able to help you tell whether a
specific product qualifies.
What do I need to do to qualify for the incentives?
Under the IRS rules, manufacturers need to certify that specific
measures are eligible. Homeowners should obtain a copy of this
certification from the manufacturer, installer or retailer when buying
these products. Certifications need not be submitted to the IRS, but
should be kept on file in case the IRS has questions. Homeowners should
also make notes on when each eligible measure is installed- only
measures "placed in service" in 2009 or 2010 are eligible.
To apply for the incentive, use IRS form 5695. Please note that this
version of the form is for 2008, and so does not include line items for
the incentives discussed on this page. There will be a section for these
incentives on the 2009 iteration of the form which will likely be
available in early 2010.
EPACT 2005 and ARRA 2009
Tax Credits for Energy Efficiency
Home Heating & Cooling Equipment
What are the incentives for home heating & cooling equipment?
Please note that these incentives have changed as of February 17, 2009.
If you installed home envelope components between January 1 and February
16, 2009, click here.
Purchasers of highly efficient heating, cooling, and water heating
equipment can take tax credits of 30% of installed cost for purchasing
qualifying equipment, as detailed below. These credits are available for
systems placed in service from January 1, 2009, through December 31,
2010. There is a $1,500 cap on the credit per home, including the amount
received for insulation, windows, air and duct sealing.
What types of equipment qualify?
• High-efficiency gas, oil, and propane furnaces and boilers
• High-efficiency central air conditioning units, including air-source
heat pumps (16 SEER or higher)
• NEW - Ground-source or geothermal heat pumps
• NEW - Biomass Stoves
• High-efficiency fans for heating and cooling systems
• High-efficiency water heaters, including heat pump water heaters
•
What are the efficiency requirements to qualify for the credits?
Manufacturers and retailers should be able to help you tell whether a
specific product qualifies.
The qualification specifications are:
• Furnaces and Boilers:
Furnaces must meet an Annual Fuel Use Efficiency (AFUE) 95 or higher,
Boilers must meet an AFUE of 90 or better.
• Central Air Conditioning Units:
Central air conditioning units and air-source heat pumps must meet
the highest tier standards set by the Consortium for Energy Efficiency
(CEE) as of February 17, 2009, which in most cases requires a Seasonal
Energy Efficiency Ratio (SEER) of 16. SEER measures performance
throughout the cooling season. More information on the CEE
specification.
• Biomass Stoves:
Stoves must have a thermal efficiency of 75% as measured using a
lower heating value, and be used to heat a dwelling unit or heat water
for use in the same. The law defines biomass fuel as anything from
agricultural crops, trees, wood wastes & residues to pellets,
plants, grasses and fibers.
• Fans for heating and cooling systems:
Fan uses no more than 2% of total heating system energy use, as
defined by DOE test procedure. For more information, see the Gas
Appliance Manufacturers Association web site. It is still unclear how
the 2009 Stimulus legislation has impacted this incentive - it seems
reasonable to assume that the cost basis will be the reasonable cost of
the fan, not the entire furnace. IRS has yet to issue specific guidance
on this issue.
• Water Heaters:
Gas or propane water heaters—Energy Factor of at least 0.82, or a
thermal efficiency of at least 90%.
Heat pump water heaters—Energy Factor of at least 2.0
Where must the equipment be used?
Under guidance issued by the IRS, equipment is eligible if installed
in a home occupied by a taxpayer as their principal residence at the
time the equipment is installed. This implies that equipment in new
homes is generally not eligible since in new homes equipment is
generally installed prior to occupancy. However, efficient equipment in
new homes can help that home qualify for the new home tax credit.
What do I need to do to qualify for the incentives?
Under the IRS rules, manufacturers need to certify that specific
measures are eligible. Homeowners should obtain a copy of this
certification when buying these products from the manufacturer,
contractor or retailer. Certifications need not be submitted to the IRS,
but should be kept on file in case the IRS has questions. Homeowners
should also make notes on when each eligible measure is installed- only
measures "placed in service" in 2009 or 2010 are eligible.
To apply for the incentive, use IRS form 5695. Please note that this
version of the form is for 2008, and so does not include line items for
the incentives discussed on this page. There will be a section for these
incentives on the 2009 iteration of the form which will likely be
available in early 2010.
The above information was taken from The Tax Incentives Assistance
Project (TIAP) website, www.energytaxincentives.org.
About the Tax Incentives Assistance Project (TIAP)
The Tax Incentives Assistance Project (TIAP) is sponsored by a
coalition of public interest nonprofit groups, government agencies, and
other organizations in the energy efficiency field. It is designed to
give consumers and businesses information they need to make use of the
federal income tax incentives for energy efficient products and
technologies passed by Congress as part of the Energy Policy Act of 2005
and subsequently amended several times.
TIAP activities include the following:
• Providing through this web site, information to consumers,
businesses, and energy-efficiency firms.
• Working with the Departments of Treasury, Department of Energy and
other agencies on rules to implement the tax incentives.
• Providing information, presentations and technical assistance to state
and utility program implementers who want to use the federal tax
incentives to complement their local programs.
• Networking with professional associations, trade associations and
firms that provide products and services eligible for the tax
incentives.
Organizations active in TIAP include the following:
Alliance to Save Energy
American Council for an Energy-Efficient Economy
California Energy Commission
Vermont Energy Investment Corporation
Energy Foundation
Florida Solar Energy Center
National Association of State Energy Officials
National Electrical Manufacturers Association
Natural Resources Defense Council
New Buildings Institute
New York State Energy Research and Development Authority
Northwest Energy Efficiency Alliance
Residential Energy Services Network
Solar Energy Industries Association
U.S. Department of Energy
U.S. Environmental Protection Agency