Qualifying for Energy Tax Credits

Tax credits are available for only your principal residences and will be filed on your 2009 taxes (due in 2010). Not all Energy Star products qualify, but double-check for qualifications.

The item purchased must be in service between Jan 1 2009 and Dec 31 2010 for many items but for higher priced items the deadline is extended.

Make sure to save your receipts and the Manufacturer Certification Statement.  For windows, you’ll need to save the Energy Star label.  These do not need to be sent to the IRS, but instead filed in case it is requested by the IRS for auditing purposes.

The maximum credit allowed is $1,500 for two years (2009 and 2010) for all of the qualifying home improvements.  High priced items like Geothermal heat pumps, solar panels, fuel cells, windmills and solar water heaters are not subject to this tax credit cap and the credits are in effect till 2016.

Congress passed the financial bailout bill late last year which included a range of federal tax credits and cash gifts for businesses.  It also included a new and renewed tax credits for individuals making energy efficient choices and renewable energy improvements to both their home and automobiles.  In February the government expanded and extended those credits.

To take advantage of the max allowed, it’s important to take a look at what can be used:

$1,500 Home Tax Credits for Energy Efficiency

You can claim a home tax credit for energy efficient choices made in 2009 (but not for improvements made in 2008).  This includes new insulation, an energy efficient furnace, boiler, air conditioner, or energy efficient windows.  A tax credit of up to $500 expired in 2007 but was renewed in 2009 by the bailout bill and was increased to $1,500.  The economic stimulus plan also stripped out most caps on individual home improvments, which applied to things like windows, heating equipment and more.

*Note that the tax credit only applies to equipment not the labor.

$2000 or More in Home Energy Tax Credits for Geothermal, Solar, Wind Turbines or Fuel Cells

The stimulus bill also removed the $2,000 cap and was replaced with a 30% tax rebate on qualified solar energy programs, geothermal heat pumps, fuel cell systems and small wind turbines.

$500 Home Energy Tax Credits for Fuel Cells

The tax incentive is restored through 2009 and through 2016 and covers up to $500 per 0.5 kw of capacity.

$7,500 Energy Tax Credits for Plugin Hybrids

The first 200,000 buyers of plugin-in hybrid vehicles from each manufacturer now qualifies for a $7,500 tax rebate, which was capped before the bailout bill at $3,500.

$2,500 for Plug-in Electric Motorcycles or Low Speed Vehicles

There is now a 10% tax credit through 2011 with a cap of $2500 for new electric plug-in motorcycles, low speed and three-wheeled vehicles.  There is also a 10% tax rebate and a $4,000 cap for converting an existing vehicle to a plug-in.

$50,000 for Installing a Clean Fuel Refueling System

You can now qualify for up to $50,000 (up from $30,000) if a clean fuel refueling system is installed in 2009 or 2010.  Go with hydrogen and the credit increases all the way up to $200,000 and is good through 2014.

State Tax Energy Credits

There may be a $6,500 credit per qualifying home available through the Weatherization Assistance Program.  The Department of Energy’s Office of Renewable Energy and Energy Efficiency had its budget increased by 10 fold and will be providing grants to states and local governments which should be seen trickling down to individuals.

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