Tax Credits Available for Energy-Saving Home Improvements

Recent law changes have increased, broadened, and liberalized the non-business energy property credit and the residential energy property credit.

Non-business Energy Property Credit(25C):
For years beginning after 2008 and before 2011, a taxpayer can claim a credit equal to 30% of the sum of the cost of: qualified energy efficiency improvements to his/her home and residential energy property expenditures, up to an aggregate amount of $1,500 in credits. Qualified energy property expenses include expenditures for: a qualified natural gas, propane, or oil furnace; a qualified natural gas, propane, or oil hot water boiler; an advanced main air circulating fan; or an energy-efficient building property that meets specific energy standards. Examples of such energy efficient building property include electric heat pump water heaters; electric heat pumps; central air conditioners; natural gas, propane or oil water heaters; or stoves burning biomass fuel.

Residential Energy Property Credit(25D):
Except for qualified fuel cell property, no dollar limit applies for the residential energy property credit. A taxpayer can claim a credit of 30% of qualifying expenditures made for solar water heating, geothermal heat pump, small wind energy, and solar electric property used in the taxpayer’s principal residence. For qualified fuel cell property expenditures, the credit for any tax year can’t exceed $500 for each .5 kilowatt of capacity of the qualified fuel cell property to which the expenditure relates. This credit is available for property placed in service before 2017.