Federal Tax Credits for Energy Efficiency

A tax credit can provide significant savings. It reduces the amount of income tax you have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a tax credit directly reduces the tax itself. You must refer to the final Internal Revenue Service (IRS) rules to determine what qualifies for the tax credit.

Please note, not all ENERGY STAR qualified homes and products qualify for a tax credit. These tax credits are available for a number of products at the highest efficiency levels, which typically cost much more than standard products. If, for whatever reason, you decide not to purchase a product covered by the tax credit, you may still consider purchasing an ENERGY STAR product. ENERGY STAR distinguishes energy efficient products which, although they may cost more to purchase than standard models, will pay you back in lower energy bills within a reasonable amount of time, without a tax credit.

Product Category
Product Type
Tax Credit Specification
Tax Credit
Notes
HVAC Central A/C

Split Systems: EER > =12.5, SEER > =15

Package Systems: EER > = 12, SEER > = 14

 $300

Note that not all Energy Star products will qualify for the tax credit.

Use IRS Form 5695
Air Source Heat Pumps HSPF>=9 EER>=13 SEER>=15 $300

Note that not all Energy Star products will qualify for the tax credit.

Use IRS Form 5695

 
Gas, Oil, Propane Furnace or Hot Water Boiler Firnaces: AFUE>=95 Boiler: AFUE>=95 $150

Note that not all Energy Star products will qualify for the tax credit.

Use IRS Form 5695

Advanced Main Air Circulating Fan No more than 2% of furnace total energy use $50

For a list of qualifying products go to the Gas Appliance Manufacturing Association.

Use IRS Form 5695
Gas, Oil, Propane Furnace Water Heater Energy Factor > = 0.80 $300

Only some tankless water heaters currently qualify. This is over 33% more efficient than the current federal standard.

Use IRS Form 5695
Electric Heat Pump Water Heater Energy Factor > = 2.0 $300

This is more than twice as efficient as the current federal standard.

Use IRS Form 5695
Solar Energy Systems Solar Water Heating

At least half of the energy generated by the “qualifying property” must come from the sun.

Homeowners may only claim spending on the solar water heating system property, not the entire water heating system of the household.

The credit is not available for expenses for swimming pools or hot tubs.

The water must be used in the dwelling.
The system must be certified by the Solar Rating and Certification Corporation (SRCC).

 30% of cost, up to $2,000 Use IRS Form 5695
Photovoltaic Systems Photovoltaic systems must provide electricity for th residence, and must meet applicable fire and electrical code requirement 30% of cost, up to $2,000 Use IRS Form 5695
Fuel Cells Fuel Cells Efficiency of at least 30% and must have a capacity of at least 0.5 kW 30% of cost, up to $1,000 per kW of power can that be produced Use IRS Form 5695