Last DSIRE Review: 01/04/2013
||Personal Tax Credit
|Eligible Efficiency Technologies:
||Water Heaters, Furnaces , Boilers, Heat pumps, Central Air conditioners, Building Insulation, Windows, Roofs, Circulating fans used in a qualifying furnace
|Eligible Renewable/Other Technologies:
||Biomass, Stoves that use qualified biomass fuel
|Amount:||Purchases made in 2011, 2012, or 2013: Varies (see below)
|Maximum Incentive:||For purchases made in 2011, 2012, and 2013: Aggregate amount of credit is limited to $500. Taxpayer is ineligible for this tax credit if this credit has already been claimed by the taxpayer in an amount of $500 in any previous year.|
For purchases made in 2009 or 2010: Aggregate amount of credit for all technologies placed in service in 2009 and 2010 combined is limited to $1,500
|Equipment Requirements:||Equipment must be new and in compliance with all applicable performance and safety standards as described in tax code|
26 USC § 25C |
8/8/2005 (subsequently amended)
H.R. 8 (American Taxpayer Relief Act of 2012)|
IRS Form 5695 & Instructions: Residential Energy Credits|
Note: This tax credit expired at the end of 2011. The American Taxpayer Relief Act of 2012 retroactively renewed this tax credit effective January 1, 2012, expiring again on December 31, 2013. Any qualified equipment installed in 2012 or 2013 is eligible for this credit. As in previous years, the cumulative maximum amount of tax credit that can be claimed by a taxpayer in all years combined is $500. If a taxpayer has already claimed a tax credit of $500 for purchases made in any previous year, they are ineligible for additional tax credits for any new equipment purchases.
This credit applies to energy efficiency improvements in the building envelope of existing homes and for the purchase of high-efficiency heating, cooling and water-heating equipment. Efficiency improvements or equipment must serve a dwelling in the United States that is owned and used by the taxpayer as a primary residence. The maximum tax credit for all improvements made in 2011, 2012, and 2013 is $500. The cap includes tax credits for any improvements made in any previous year. If a taxpayer claimed $500 or more of these tax credits in any previous year, any purchases made in 2011, 2012, or 2013 will be ineligible for a tax credit.
Building Envelope Improvements
Owners of existing homes may receive a tax credit worth 10% of the cost of upgrading the efficiency of the building's envelope. Installation (labor) costs are not included and the credit is capped at $500 for all improvements. To be eligible for the credit, the improvement must meet the prescriptive requirements established for it under the 2009 International Energy Conservation Code (including supplements). The following improvements are eligible for the tax credit:
- Insulation materials and systems designed to reduce a home's heat loss or gain
- Exterior doors and windows (including skylights) --- no more than $200 in total credits can be claimed for windows in years 2006 - 2013
- Pigmented metal roofs designed to reduce heat gain, and asphalt roofs with appropriate cooling granules.
Heating, Cooling and Water-Heating Equipment
Taxpayers who purchase qualified residential energy-efficient property may eligible for a tax credit. The credit is equal to the full cost of the equipment up to the following caps:
- Advanced main air circulating fan: $50
- Natural gas, propane, or oil furnace or hot water boiler with an annual fuel utilization rate of 95 or greater: $150
- Electric heat pump water heater with an energy factor of at least 2.0: $300
- Electric heat pump which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
- Central air conditioner which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
- Natural gas, propane, or oil water heater which has either an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent: $300
- Biomass stoves that use "plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers": $300
The Energy Policy Act of 2005 established the tax credit for energy improvements to existing homes. The credit was originally limited to purchases made in 2006 and 2007, with an aggregate cap of $500 for all qualifying purchases made in these two years combined. There were also separate individual caps for the different equipment types. The Energy Improvement and Extension Act of 2008 (H.R. 1424: Div. B, Sec. 302) of 2008 reinstated the credit for 2009 purchases and made other minor adjustments. The American Recovery and Reinvestment Act of 2009 further extended the credit to include improvements made in 2010 and replaced the $500 aggregate cap with a $1,500 aggregate cap for improvements made in 2009 and 2010. This credit was again renewed in 2010 for improvements made in 2011, but the credit was reduced to its original form and original cap of $500.
This credit was unavailble for purchases made in 2012. The American Taxpayer Relief Act of 2012 retroactively renewed this tax credit effective January 1, 2012, expiring again on December 31, 2013.
Geothermal heat pumps were originally eligible for this credit, with a $300 cap. However, geothermal heat pumps are now eligible for the residential renewable energy tax credit, with no cap.
Public Information - IRS|
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov