Green Tax Savings: $500 Energy Tax Credits for Upgrade to Your Primary Residence

Certain eco-friendly upgrades to your home can qualify for federal tax credits through the end of this year. A credit is much more valuable to you than a standard tax deduction. A credit is a dollar for dollar reduction in your tax bill. A deduction's value is based on your marginal tax bracket. For example, a $500 tax credit reduces your taxable income by $500. A $500 tax deduction for someone in the highest income tax bracket of 35% is only worth $175 ($500 x .35)

The maximum lifetime energy credit you can claim for upgrades to your primary residence is $500 total. Among the energy-efficient upgrades that qualify for the credit are:
  • New windows, storm windows, sky lights: credit on 10% of the cost up to $200 total for all windows.
  • New Exterior doors: credit on 10% of the cost up to $500.
  • Metal roofs: 10% of the cost up to $500.
  • Insulation. Credit on 10% of the cost up to $500.
  • Central air/heating: $300 credit.
  • New Furnace: $150.
  • Geo-Thermal Heat Pump: $300.
  • New Water Heater: $300

You must complete IRS Form 5695 to claim a Residential Energy Credit.

To see all energy-related federal tax incentives, click here.

 
 

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