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Consumer Tax Credits for Energy Efficient Appliances Has Been Extended into 2011 With Revisions

Last year, the federal government instituted the American Recovery and Reinvestment Act of 2009 which provides a tax credit to help offset the costs of making energy efficiency improvements to your home – including energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment. If you install any of these qualifying energy efficiencies in your existing home you could be eligible to receive a tax credit for a percentage off of the cost of your purchase.

The 2009 tax credit expired on December 31, 2010. However, the government recently signed a bill to extend this deadline to December 31, 2011. While these credits are still subtracted directly from the total amount you owe on your personal income taxes, the deduction rates will be lowered for 2011.

Details regarding the revisions to the tax credit program for 2011

  • You may claim 10% of the cost of the home improvement off on your taxes – up to a maximum of $500.
  • Improvements must be made on an existing home and be your principal residence. As with the 2010 tax credits, new construction and rentals do not qualify.
  • The maximum tax credits allowed have been reduced on some of the original energy-efficient items. See below for more details.

Products Eligible for the 2011 Home Improvement Tax Credit
Many of the same products that were eligible for the 2010 home improvement tax credit are still eligible under the 2011 version of the bill; however, the amounts on most have just been reduced and/or had dollar-specific limits placed on them. Some of the eligible* products and corresponding provisions include:

  • Energy efficient doors and windows can receive a credit up to $200. Installation costs are not included.
  • Oil and gas furnaces and boilers (to 95% efficiency, up from the 90% efficiency in current law) are eligible for up to $150 in tax credits plus an additional $50 for efficient furnace fans.
  • Electric heat pump water heaters and wood heating systems are eligible for incentives up to $300. Some restrictions for energy efficiency apply.
  • Central air conditioning systems, biomass stoves for heating or water heating, electric heat pumps, and natural gas and propane water heaters are eligible up to $300 credit limit.

* Some restrictions apply. To see a detailed list of eligible products for the tax credit program, visit the Energy Star website.

For more information on this program, contact your HVAC dealer today to better understand which products qualify and how to apply these credits to your 2011 tax returns.