Efficiency Tax Credits Drop, But Don’t Disappear

Energy efficiency improvements are great for lowering electric bills. But sometimes the up-front cost can be a drawback. Since 2005, Congress has enacted a series of tax breaks for consumers who take steps to make their homes more energy efficient. In December, the outgoing 111th Congress approved extending some popular efficiency tax credits through Dec. 31, 2011, although at greatly reduced levels.

The federal Tax Relief, Unemploy-ment Insurance Reauthorization, and Job Creation Act of 2010 reduces the total lifetime credit that can be claimed on energy efficiency improvements made between 2006 and 2011 (excluding 2008, when no credit was available) from $1,500 to $500. It also lowers the percentage of efficiency upgrade costs consumers can recover, from 30% in 2009-2010 to 10% in 2011.There is a lifetime cap of $500 for any work that’s done. There are also maximum allowances for different upgrades. For installing more efficient windows, the tax credit is limited to $200, and there’s a $300 cap for “any item of
energy-efficient building property.” Other restrictions include:

--Furnaces ($150): Must have at least 95% (up from 90%) annual fuel utilization efficiency (AFUE). Oil furnaces and boilers were returned to the single furnace category at 95% AFUE.

--Advanced main air circulating fan ($50): Must utilize less than 2% of a furnace’s total energy consumption.

--Central air conditioner ($300): Must have a seasonal energy efficiency ratio (SEER) of at least 16 and an energy efficiency rating (EER) of at least 13.

--Air-source heat pump ($300): Must have at least a heating seasonal performance factor (HSPF) of 9, SEER of 16, and EER of 13.

--Biomass fuel stove ($300): Must have a thermal efficiency rating of at least 75%.

Renewable Tax Credits Remain Active
Renewable energy tax credits created by the federal stimulus bill don’t expire until Dec. 31, 2016. These credits cover 30% of the cost of materials and installation for residential solar panels, solar water heaters, small wind turbines, and geothermal heat pumps. Details are available at energystar.gov/taxcredits.

Claiming Tax Credits
Tax credits are beneficial because they directly reduce, dollar for dollar, any taxes you owe. Be sure to keep your receipts and your Manufacturer’s Certification Statement (a signed statement from the manufacturer certifying that the product or component qualifies for the tax credit) for your records. Then claim the credit on your taxes using IRS Form 5695.

Looking for Help?
Some state government offices offer additional subsidies or rebates to consumers who make their homes more energy efficient. For a list of federal, state, and local energy efficiency rebates and tax credits, visit the Database for State Incentives for Renewables & Efficiency, a project funded by the U.S. Department of Energy, at www.dsireusa.org. For a list of the Access Energy Cooperative rebates check out page of this edition of the Highline Headlines.
Source: Megan McKoy-Noe, CCC