Tax Credits

How the Program Works

As part of an effort to reduce dependence on foreign sources of energy, the federal government provides tax credits to help offset the costs of making energy efficiency improvements to your home. This program has changed somewhat for 2011 to reduce credits while still providing incentives to homeowners.

2011 Changes to Federal Tax Credits Available for Qualifying Residential Systems

Federal tax credits on qualifying, high-efficiency HVAC equipment have been modified and extended through December 31, 2011 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This program differs from the program effective in 2009-2010 in the following ways:

  • The maximum amount an eligible homeowner may receive in tax credits for purchasing qualifying products, whether those purchases are in the form of upgraded insulation, windows, HVAC equipment or other eligible improvements, will be reduced from $1,500 to $500.
  • The $500 cap is reduced by the total amount of residential energy property credits a homeowner has claimed for purchases between 2006 and 2010. If you have already claimed credits of $500 or more from improvements made prior to 2011, you will be unable to claim new credits for improvements made during 2011.
  • All furnaces and boilers, whether natural gas, propane or oil, must have an AFUE of 95 or above to be eligible for the credit.
  • The credit is no longer 30% of qualified residential energy property costs (including labor), but is now equal to an amount not to exceed:

Maximum Tax Credit Available Product Type Efficiency Requirements
$50 Any advanced main air circulating fan *See below
$150 Natural gas, propane, oil furnace or boiler 95% AFUE
$300 Split system air conditioner 16 SEER / 13 EER
$300 Split system heat pump 15 SEER / 12.5 EER / 8.5 HSPF
$300 Package air conditioner 14 SEER / 12 EER
$300 Package heat pump 14 SEER / 12 EER / 8 HSPF
$300 Package gas / electric 14 SEER / 12 EER

*Electricity use of no more than 2% of the total energy use of the furnace

Geothermal system tax credits are unaffected by these changes and remain in place as is through 12/31/2016.

Note: this bulletin is for discussion purposes only and is general in nature. This is not to be considered tax advice. See your tax professional to determine how these credits would apply in your circumstance.