Federal Tax Credits

As you may or may not be aware, the most recent Federal Stimulus Package contained funding to provide Tax Credits (these are full credits, not deductions) for homeowners who make improvements to their residence to increase its energy efficiency. The complete nuts-and-bolts of the package can be found at the Energy Star website, but I am going to give you the information I feel is most important.

First, just because a product is "Energy Star Certified" doesn't mean it is eligible for a Tax Credit. While the Energy Star program provides useful suggestions on products that will cost you less to own and/or operate, their standards are not the same as those outlined for eligibility under the Federal Stimulus Package.

Secondly, in most cases you will only be eligible to receive a total, combined maximum of $1,500 in Tax Credits for all eligible improvements you make to your home. The Tax Credit program allows a homeowner to receive a 30% credit on energy efficient improvements with a maximum credit amount of $1,500. The main exception is for alternative energy sources, such as geothermal and solar, where the 30% Tax Credit has no maximum. This is important because if you are planning to make more than one energy efficient improvement, you need to be aware that you may not receive a Tax Credit on all of the improvements.

Finally, before you make a buying decision, you need to be sure what you are purchasing will be eligible for the Tax Credits, if that is the reason you are purchasing that particular product or system. To better illustrate this point, let me use an example from the heating and air conditioning industry. There is a distinct possibility that you could purchase an air conditioner with an advertised efficiency level above the minimum required for the Tax Credit, but if the air conditioner is not matched with the proper furnace and evaporator coil, you could easily find yourself with a unit that does not qualify for any Tax Credit. At Air Assurance we take great care to assure that the systems we design will qualify for the Tax Credit, if there is any possible way to make it happen. Unfortunately, there are many companies in our industry, and others, that don't take the extra time to do this, and you are the one who ends up paying the price.

I hope this information hasn't scared you away from considering some energy efficient improvements for your home. I think we can all agree this is the right thing to do for the environment, and maybe more importantly for our bank account. At the same time, I wanted to make sure you had enough information to make an informed decision.

As always, if you have any questions or need additional information, I am only an e-mail or phone call away.

Thanks!