Energy and Appliance Tax Credits That Can Work For You

Now that more attention is focused on “green” technology and its practical uses, the Department of Energy is now encouraging consumers to use “green” appliances, through appliance tax credits tied into the government’s Energy Star guidelines.

The following are some of the more important federal “energy credits” and other related programs.

Home energy efficiency improvement tax credits

If you’re installing specific home-related products, you can receive a tax credit worth 30% of the cost, up to a limit of $1,500. The tax credits apply to all improvements added from January 1, 2009 to December 31, 2010.

Eligible products and improvements include windows, doors, insulation, metal and asphalt roofing, heaters and cooling equipment. HVAC (Heating, Ventilation and Air Conditioning) systems are also included, as are non-solar water heaters and biomass stoves.

Residential renewable energy tax credits

For those who are installing solar-powered energy systems, a 30% tax credit is available, until December 31, 2016. There is no upper limit for the cost.

The following solar-powered systems qualify for this tax credit: geothermal heat pumps, solar water heaters, and solar panels. Small wing energy systems and fuel cells have also been included under this federal energy tax credit.

Installation costs are included in the credit for HVAC systems, biomass stoves, water heaters, solar panels, geothermal heat pumps, wind energy systems and fuel cells.

Appliance rebates

Consumers who buy home appliances that pass the Energy Star efficiency guidelines will qualify for a rebate. The rebates programs are being developed on the state level, with each state able to specify which appliances will qualify, and for what rebate amount. The deadline for state governments to submit their plans is on October 15, 2009. Rebates should be available by the end of 2009 or early 2010. Rebates should range from $50 to $250. Depending on the state program, you can also apply other credit and incentive programs to the same appliance.

Appliances include central air conditioners, geothermal and air source heat pumps, boilers, oil and gas furnaces, room air conditioners, clothes washers, dishwashers, refrigerators, freezers and water heaters.

How do I apply for the credits or rebates?

For products placed in service in 2009, file the 2009 IRS Form 5695 and submit it with your 2009 taxes by April 15, 2010. The official version of this form should be available soon. You will also need the sales receipts and the Manufacturer’s Certification Statement. The statement certifies that the appliance or product qualifies for the tax credit or rebate.

For more information on energy tax credits, appliance rebates and similar programs, you can check with the Database of State Incentives for Renewable Energy, or DSIRE, at your local government offices.

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