Energy Tax Credit: What it is and How You Can Benefit from Your Home Improvement Projects

Times are tough. The decline of the economy is a constant topic of conversation and many people are looking for ways to save a little extra money. Well, here’s some good news: in February, a stimulus package was signed into law. This package renewed and lengthened the energy tax credit for energy-efficient home improvements that expired in 2007. Basically, this energy tax credit gives you the opportunity to replace your old, drafty windows with energy efficient windows. These new windows and other energy efficient improvements, which must have a U-factor and a Solar Heat Gain Coefficient of .30 or lower, will not only earn you a tax credit, but they will also lower your energy bill. If you missed your chance in 2007, now is the time to start on those home improvements.

What exactly is the energy tax credit?

The energy tax credit is very much like buying a product with a mail-in rebate. Once you’ve made the decision to purchase a hybrid car or do some energy efficient improvements to your home, you are entitled to some money back thanks to the energy tax credit; but the money won’t be returned immediately. Instead, you have to claim the credit from your purchase on your federal income tax form. In a nutshell, you’ll either receive more money on your tax return or owe less.

Who and what qualifies to receive the energy tax credit?

You must buy qualifying products between January 1, 2009 and December 31, 2010 in order to receive the energy tax credit. Unfortunately, if you purchased a hybrid car or added energy efficient windows and doors to your home in 2008, you aren’t eligible to receive any money from the energy tax credit. Products that qualify for the energy tax credit include: insulation, energy efficient doors and windows, air conditioners, furnaces, heat pumps and boilers. These products must each have a U-factor and an SHGC of .30 or lower, as well as attach at least one label from the windows showing the National Fenestration Rating Council(NFRC) certification. Not every window qualifies, even if it is “Energy Star” rated.

 You are entitled to receive up to $1,500 in compensation, total, for 2009 and 2010. If you spend $5,000 in projects and request $1,500 in return this year, you can’t claim any more money in 2010.

What do you need to do in order to receive an energy tax credit?

These are the energy-efficient products that qualify for the energy tax credit: 

• Exterior windows—this includes skylights and storm windows.
• Insulation, exterior doors or roofs—includes sealants like caulk, weather stripping and storm doors.
• Central air conditioner, heat pump, furnace, boiler, water heater, or bio gas stoves

The energy tax credit will give you 30 percent of the cost of your improvements up to $1,500 in total for 2009 and 2010. As stated above, you simply claim the credit on your federal income tax form and the money will be returned to you or you will owe less on your income taxes.

On March 30, the Department of Energy revised the criteria needed for products to qualify for the energy tax credit. The U Factor and the Solar Heat Gain Coefficient was decreased to .30 or lower. This action was taken as a result of pressure implemented by a large portion of window manufacturers who did not qualify for the stricter criteria.  There is a meeting scheduled for March 31, 2009 in which a final criteria will be set for products to qualify for the energy tax credit. It will be enforced January 1, 2010 to give manufacturers who do not meet the more energy efficient criteria time to revamp their products to qualify. 

U.S. Window Factory’s window products not only meet, but far exceed the original revised criteria. Call us today at 770-453-3000 to learn more.