Federal Tax Credit Information
Note: IRS Form 5695 & Instructions: Residential Energy Credits
are now available. Also note that the federal tax credits for home energy-efficiency improvements under 26 USC § 25C expired
on 12/31/07, but the solar and fuel cell tax credits are available through 12/31/08.
Guide to Federal Tax Incentives - The Solar Energy Industries Association
has developed helpful guidance and tips for safe and effective use of the new
federal tax credits for energy efficiency and renewable energy investments.
(To download the guide, SEIA will ask you to enter your name and email address)
The Energy Star program also has information related to
tax credits for Consumers
(Home Improvements, Cars, Solar Energy Systems, Fuel Cells), Tax Credits for Home Builders, Tax Credits for Appliance
Manufacturers, and Tax Deductions for Commercial Buildings
DOE Building Tech Program has
more information about tax credits and other helpful links.
There are many state, federal and local incentives available to help pay for the cost of installing renewable energy
systems. Here is a Database of Grants and Rebates.
IRS Releases Guidance on Energy Efficiency Tax Credits
The U.S. Internal Revenue Service (IRS) has issued guidance on the tax credits for new energy efficient homes and
for energy efficiency improvements to existing homes, as established by the Energy Policy Act of 2005. A credit of up
to $2,000 is available for eligible contractors who build a qualified new energy efficient home and sell it either
this year or next. The credit is available for all new homes, including manufactured homes constructed in accordance
with the Federal Manufactured Homes Construction and Safety Standards. See the
IRS press release and the guidance
for traditional homes (PDF 25 KB) and
manufactured homes (PDF 36 KB).
For existing homes, the law provides a 10 percent credit for buying qualified energy efficiency improvements,
including insulation, reflective metal roofs, insulated exterior doors, and energy efficient exterior windows and
skylights. The law also provides residential tax credits of $50 for each advanced main air circulation fan and $150
for qualified furnaces or hot water heaters fueled with natural gas, propane, or oil. That credit increases to $300
for qualified heat pump water heaters; high-efficiency water heaters, boilers, furnaces, and central air conditioners;
and geothermal heat pumps. To earn the credit, the improvements must be made this year or next year. The maximum credit
for both years is $500, of which expenses for windows can provide no more than $200. Manufacturers of these products may
certify them as eligible for the tax credits, in which case the homeowner can rely on the certification to claim the credit.
See the IRS press release and the
full IRS guidance (PDF 37 KB).
To help homeowners take advantage of the energy efficiency tax credits, the Alliance to Save Energy (ASE) has created
a special tax credits Web site. ASE has also issued state-by-state energy saving tips for 37 states and the District
of Columbia, and has published a free consumer booklet of energy saving tips called "Power$mart: The Power Is In
Your Hands." See the ASE Energy Efficiency Tax Credits Web site,
the ASE press release and
Web site for the state-by-state energy tips,
and the ASE press release and
Web site for the Power$mart booklet.