Are you planning to make energy-efficient upgrades to your home this year? Thanks to the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, federal tax credits have been extended into 2011 (and for some products, 2016). Here’s an overview of the details. To see a breakdown of eligible products and tax credit amounts, visit the ENERGY STAR 2011 Federal Tax Credits for Consumer Energy Efficiency webpage.
You may qualify for more than a federal tax credit. Appliance rebate programs are available in many states. Check out the U.S. Department of Energy’s map and list to see if your state has an approved program. Additional state, local, federal and utility incentives can be found at the Database of State Incentives for Renewables and Efficiency.
Know the filing guidelines. Products “placed in service” – installed and ready to use – in 2011 should be claimed on your 2011 taxes. You’ll need to file the 2011 version of IRS Form 5695, which will be available in early 2012. For more information about applying for the tax credit, click here.
Many, but not all, ENERGY STAR-qualified products are eligible. Ceiling fans, clothes washers and dryers, dishwashers and refrigerators are some of the products not covered by the tax credit. To see more items that aren’t eligible, click here.
The credit levels have changed. The most common items – energy-efficient windows and doors, for example – are eligible for a 10 percent tax credit, which is lower than last year. Geothermal heat pumps, solar energy systems, fuel cells and wind generators are eligible for a 30 percent tax credit.
The actual amount of the credit depends on the product. Homeowners can get up to $500 back for insulation, roofs and doors. Windows are capped at $200; furnace and boilers at $150; and air conditioners, air source heat pumps, water heaters and biomass stoves at $300. There is no limit for geothermal heat pumps, solar energy systems, fuel cells and wind generators.
Many products have a lifetime cap of $500. If you go over the $500 cap in tax credits from 2006 to 2010, you’re not eligible for additional credits. Exempt from this cap are geothermal heat pumps, solar energy systems, fuel cells and wind generators – there is no upper limit for these items through 2016.