Save Taxes with Home Energy Efficiency

Save Taxes with Home Energy Efficiency

The Residential Energy Efficiency Tax Credit is a federal program that gives homeowners a personal tax credit for making energy efficiency improvements to their homes. The program covers some upgrades to energy efficient systems such as:

  • Water heating systems
  • Windows, doors, skylights
  • Weatherization
  • Heating and cooling systems.

Ensure your upgrades qualify for tax credits

To be eligible for the tax credit, the home must be your primary residence and upgrades must meet certain requirements. Before you make improvements, make sure the product you’re installing meets the standards of the program. Even though a product is Energy Star certified, it may not qualify—always check with your contractor first. In addition, you may need a manufacturer’s certification statement to prove the eligibility of the product you install. For more information, see frequently asked questions on the Energy Star website.

Pay attention to costs and caps

The tax credit program has caps on the amount of credit you can claim. For example, improvements to building envelopes are capped at $500 and electric heat pump water heaters (with an energy factor of minimum 2.0) are capped at $300. Installation costs are not included in tax credit calculations.

The maximum aggregate amount of credit you can claim is $500 for purchases made in 2013. If you’ve already claimed this credit in previous years, you’re not allowed to claim it again.

Now is the time to upgrade

The Residential Energy Efficiency Tax Credit is set to expire on December 31, 2013. If you’re thinking of making energy efficiency improvements to your home, this is the time to do it. Although the program may be renewed, there’s no guarantee.

For more information about the Residential Energy Efficiency Tax Credit, visit energy.gov and DSIRE (the Database of State Incentives for Renewables and Efficiency).

In addition, many state and local governments also offer incentives for home energy upgrades. To see what your state has to offer, select your state on the DSIRE map of state incentives.

Additional tips for saving energy

Even if you have no immediate plans to install energy efficient systems in your home, you can still reduce energy consumption and costs through small changes, such as installing programmable thermostats and energy efficient light bulbs. For more ideas, see the U.S. Department of Energy’s EnergySavers: Tips on Saving Money and Energy at Home.