Energy Efficiency Tax Credits in Next Year
15th Apr 2013
Energy efficiency tax credits can be claimed in next year's tax season. There is a list of qualifying energy saving product categories. In order to qualify for the tax relief, you must have installed any of the qualifying items by the end of 2013. Here, we explain the why, what and how of much of this legislation.
Energy Efficiency Tax Credits: Why?
The 'why' might seem obvious - to promote the installation of energy efficient equipment in order to ease the pressure on fossil fuels, and to enable the USA to play its part in reducing carbon emissions into the atmosphere.
However, there is another reason, and that can be deduced from the legislation that enacted the credits: the Taxpayer Relief Act. This act was passed very late, but helped to enable the country from ending up in a very serious fiscal situation. Taxpayers gain, and so do those companies that manufacture or market such equipment.
What Energy Efficient Equipment is Included?
There are several product categories included in the energy efficiency tax credits you can claim:
- Biomass Stoves: You can claim $300 of the cost of installing biomass stoves that run on woodchips or pellets. The thermal efficiency rating must be at least 75%.
- HVAC Units: Installing Central heating, ventilation and air conditioning units enables you to claim 10% of the cost in your tax return in 2014. You can claim $300 on air source heat pumps, where heat is extracted from the outside air and transferred indoors.
- Insulation: You can claim 10% of the cost of insulation materials, but not the actual installation.
- Roofing: If you install metal or asphalt roofing that has been designed to keep your home cool, then you can claim 10% of the material cost.
- Water heaters: Water heaters qualify if run on propane, oil or natural gas, and if the thermal efficiency is at least 90% or the Energy Factor is at least 0.82. You can claim $300 for this.
- Water Boilers: You can claim $150 for a furnace or hot water boiler running on propane, natural gas or oil and with an AFUE (Annual Fuel Utilization Efficiency Rate) of 95 percent or more.
- Windows/Doors: Installing exterior windows and doors designed to retain heat enables you to claim 10% of the cost. Doors and skylights are capped at $500, with windows at $300.
- Geothermal Heat Pump Systems: Where a series of pipes collect the earth's natural heat underground and transfers it indoors.
- Wind Turbines: These are small residential turbines or windmills that generate electricity.
- Solar Panels: Photovoltaic cells generate electrical energy from the sun's rays. These can be mounted on roofs or on panels situated outdoors in a field, garden or yard.
- Fuel cell installations: These also qualify for a 30% tax credit, but these are limited to $500. The fuel cell assembly must have a minimum capacity of 0.5 KW, and generation efficiency of more than 30%.