Energy Tax Credits for Homeowners

If you make energy saving improvements to your home during 2009 or 2010, you may be eligible for the greatly expanded money saving tax credits included in the American Recovery and Reinvestment Act of 2009.

Nonbusiness Energy Property Credit

You may be able to take advantage of a tax credit of up to 30% of the amount paid or incurred in energy efficiency improvements to your primary home. Improvements that may be eligible include energy-efficient skylights, windows and outer doors, energy-saving water heaters, central air conditioners, and biomass stoves.

There is a $1,500 credit cap over two years (2009 and 2010) that applies to all qualifying property, no matter what type of residence you own, as long as it’s your primary residence and located in the U.S. 
You can take advantage of this credit even if you claimed energy credits in past years.

To qualify for the credit, improvements must be placed into service after December 31, 2008, and before January 1, 2011.

Residential Energy Efficient Property Credit

In addition to the energy saving credit, a new renewable energy credit creates tax savings of 30% for solar electrical systems, solar water heating systems, geothermal heat pumps, fuel cells, and wind turbines. Unlike the energy saving improvements credit, this credit is not restricted to your primary residence (except for the fuel cell credit).

This credit is capped as follows:

• $2,000 for solar electric systems
• $2,000 for solar water heating systems
• $2,000 for geothermal heat pumps
• $500 for each 0.5 kilowatt capacity of fuel cells
• $500 for each 0.5 kilowatt capacity of wind turbines (up to $4,000)

Learn more about energy tax credits.