Credit worth up to $1,500 for energy-efficient home improvements
The 2009 stimulus law beefed up the tax credits that are available to you, helping you slash your overall tax bill. Remember that a tax credit reduces your income taxes dollar-for-dollar. Think of it as getting a rebate for part of what you spend to make your home more energy-efficient.
Before Congress changed the law, you could not claim more than a $500 in tax credits for installing energy-efficient products such as windows, furnaces, heat pumps and the like. Many items had individual caps as well, such as a $200 credit limit on windows.
Now you can claim a maximum total energy credit of $1,500 for 2009 and 2010, and the caps on individual items are eliminated. In addition, the old 10 percent credit rate is juiced up to a more robust 30 percent. That means you can reduce your tax bill by 30 percent of what you pay for the following items that meet federal energy-efficiency standards, up to the $1,500 maximum tax savings:
- Energy-efficient windows
- Central air conditioners
- Electric heat pumps
- Water heaters
- Exterior doors
- Natural gas, propane or oil furnaces
- Natural gas, propane or oil hot water boilers
- Biomass fuel stoves
- Main air circulating fans
- Pigmented metal roofs
The manufacturer should be able to tell you which of their products qualify for the souped-up credit. If you claimed the energy credit in the past and used up part or all of your old $500 allotment, don’t worry. You get a fresh start in 2009 and 2010, and can earn a credit of up to $1,500 over those two years. There’s no reduction for any energy credits you took previously. One restriction: You can claim this credit only for improvements made to your primary residence.