December Deadline: Tax Credit for Energy-Efficient Home Upgrades Will Expire Soon
A federal tax credit for energy- and money-saving home upgrades will expire on Dec. 31. But you can beat the deadline by making energy-efficient upgrades now.
Busy Season for Contractors
When similar tax credits were expiring last year, manufacturers noted that consumers across the United States rushed to purchase eligible items. Now, as consumers scramble to make upgrades before the year ends, some contractors are reporting an uptick in business and projecting a busy season in November and December.
To take advantage of the energy efficiency tax credits expiring at the end of this year, line up a contractor ASAP or get ready to install upgrades yourself.
Put Energy-Efficient Upgrades in Use by Dec. 31
The tax credit in question applies to improvements “placed in service” through Dec. 31, 2011. The IRS defines “placed in service” as the point when the products or materials are fully installed and are ready for use – not the time of purchase.
So, it’s not enough just to put the order in for a new door or window by Dec. 31 – you’ve got to install it, too. The tax credit applies to how much you paid for the improvement, excluding labor for building components like windows, doors and insulation – but including labor for HVAC components like air conditioners, heat pumps and water heaters. Learn more about the how the tax credits work.
What Does The Credit Apply To?
Five basic energy efficiency upgrades are among the six items that are eligible for the tax credit:
- Insulation
- Windows, doors and skylights
- Non-solar water heaters
- Metal and asphalt roofs
- HVAC systems
- Biomass stoves
Check out this easy chart to see the value of each item's tax credit, and which installed upgrades qualify under the eligibility criteria:
|
Improvement |
Value of Credit |
Eligibility Criteria |
|
Insulation or insulating material |
10% of cost |
Meets the criteria required by the 2009 International Energy Conservation Code |
|
Exterior window or skylight |
10% of cost, up to $200 |
Meets ENERGY STAR requirements |
|
Exterior door |
10% of cost |
Meets ENERGY STAR requirements |
|
Metal roof with pigmented coating, or asphalt roof with cooling granules |
10% of cost |
Meets ENERGY STAR requirements |
|
Advanced main air circulating fan |
$50 |
Electricity use of no more than 2% of total energy used by the furnace |
|
Natural gas, propane, or oil furnace, or hot water boiler |
$150 |
Annual fuel utilization efficiency (AFUE) rate not less than 95 |
|
Electric heat pump water heater |
$300 |
Energy factor of at least 2.0 |
|
Electric heat pump |
$300 |
Meets the highest efficiency tier set by the Consortium for Energy Efficiency for 2009: SEER of at least 15, an EER of at least 12.5, and an HSPF of at least 8.5 |
|
Central air conditioner |
$300 |
Meets the highest efficiency tier set by the Consortium for Energy Efficiency for 2009: SEER of at least 16 and an EER of at least 13 for most air conditioners |
|
Natural gas, propane or oil water heater |
$300 |
Energy factor of at least .82 or a thermal efficiency rating of at least 90% |
|
Biomass stove |
$300 |
|
Geothermal, Renewable Upgrades Eligible Until 2016
Once you have established your energy-efficient home with the above upgrades, your next step could be installing a geothermal heat pump. Geothermal heat pumps will still be eligible for a tax credit through 2016, along with credits for residential renewable energy systems.
Because of the cost and labor intensity of installing large energy-saving systems, now is the time to start thinking about whether these upgrades are appropriate for your home. Be sure to read about these upgrades on the Energy Savers website.
Expiring Tax Credits for Businesses
If you own a business, you may already know about commercial and manufacturing tax credits that reduce the cost of increasing the energy efficiency of your company and the appliances you may produce. Such credits and deductions include several that expire at the end of 2011:
- Electric Vehicles and Refueling Property Tax Credit: Both businesses and individuals can claim credits for a variety of vehicles that run on batteries or alternative fuel, as well as related equipment, by the end of 2011.
- Appliance Manufacturers’ Tax Credit: Businesses that manufactured certain energy-efficient products in 2011 can use this credit.
- New Home Builders’ Tax Credit: Builders of energy-efficient homes in 2011 are eligible for this credit.
More on Home, Vehicle & Business Tax Credits
- Details on energy-related tax credits for consumers: Energy Efficiency Home and Vehicle Tax Credits
- Details on on energy-related tax credits for businesses: Commercial and Manufacturing Tax Incentives for Energy Efficiency
- Alliance 2010 article on tax credits for consumers and businesses: Can I Get a Tax Credit for That?
- Alliance press release on tax-related policy: Alliance to Save Energy Applauds Energy Efficiency Incentives in Major Tax Bill
- From the Department of Energy: Energy Savers: Tax Credits for Energy Efficiency
