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Energy Efficiency Tax Credits Set to Expire

Act this month if you want to take advantage of the incentives.

A federal tax credit for energy- and money-saving home upgrades will expire on Dec. 31. But you can beat the deadline by making energy-efficient upgrades now. To be eligible for the credits (see chart below), the products must be installed by December 31. That means you’ll have to get a contractor and complete the job (or do it yourself) by then.

Myrtle Beach Energy-Efficient Home Improvement TipsFive basic energy efficiency upgrades are among the six items that are eligible for the tax credit:

  • Insulation
  • Windows, doors and skylights
  • Non-solar water heaters
  • Metal and asphalt roofs
  • HVAC systems
  • Biomass stoves

The tax credit applies to how much you paid for the improvement, excluding labor for building components like windows, doors and insulation – but including labor for HVAC components like air conditioners, heat pumps and water heaters.  Geothermal heat pumps will still be eligible for a tax credit through 2016, along with credits for residential renewable energy systems.

The chart below shows the value of each tax credit, and which installed upgrades qualify under the eligibility criteria:

Improvement Value of Credit Eligibility Criteria
Insulation or insulating material 10% of cost Meets the criteria required by the 2009 International Energy Conservation Code
Exterior window or skylight 10% of cost, up to $200 Meets ENERGY STAR requirements
Exterior door 10% of cost Meets ENERGY STAR requirements
Metal roof with pigmented coating, or asphalt roof with cooling granules 10% of cost Meets ENERGY STAR requirements
Advanced main air circulating fan $50 Electricity use of no more than 2% of total energy used by the furnace
Natural gas, propane, or oil furnace, or hot water boiler $150 Annual fuel utilization efficiency (AFUE) rate not less than 95
Electric heat pump water heater $300 Energy factor of at least 2.0
Electric heat pump $300 Meets the highest efficiency tier set by the Consortium for Energy Efficiency for 2009: SEER of at least 15, an EER of at least 12.5, and an HSPF of at least 8.5
Central air conditioner $300 Meets the highest efficiency tier set by the Consortium for Energy Efficiency for 2009: SEER of at least 16 and an EER of at least 13 for most air conditioners
Natural gas, propane or oil water heater $300 Energy factorof at least .82 or a thermal efficiency rating of at least 90%
Biomass stove $300 Thermal efficiency rating of at least 75%
Heats a dwelling or water for use in a dwelling
Fueled by plant-derived fuel

Hopefully a new set of energy efficiency tax incentives are also on the way. In November, U.S. Senators Dianne Feinstein (D-Calif.), Olympia Snowe (R-Maine) and Jeff Bingaman (D-N.M.) introduced legislation providing new tax incentives to help cut Americans’ energy bills. The Cut Energy Bills at Home Act provides a performance-based 30 percent tax credit of up to $5,000 for American homeowners to reduce their energy consumption and costs by making their homes energy efficient.

The Cut Energy Bills at Home Act:

● Provides a performance based tax credit for residential whole-home energy consumption. The value of the credit begins at $2,000 for a 20 percent reduction in the energy consumption of a residential home for heating, cooling, water heating, and permanent lighting. The credit increases by $500 for every additional 5 percentage point increase in energy savings, up to $5,000. The credit is capped at 30% of the cost of the improvements and expires at the end of 2014.
● Defines how to calculate energy savings using computer modeling calibrated to actual energy bills before the improvements.
● Sets requirements for the contractor, installation process, and the modeling software to ensure work quality. It also requires the Secretary of Treasury in consultation with the Secretary of Energy develop taxpayer documentation regulations for what the taxpayer needs to keep on file for documentation purposes.

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