Consumer Energy Tax Credit Extended by Congress

Congress Extended Tax Credits for Energy Retrofits

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A $500 tax credit for residential energy-retrofit customers was preserved by the recent fiscal-cliff agreement. The American Taxpayer Relief Act of 2012 passed by Congress on January 3, 2013, provides extensions of the  tax credit to cover material costs of energy-efficient upgrades to existing homes, but reduces the maximum amount from $1500 to $500. The credit is only redeemable if the upgrades are in place by the end of 2013. If a taxpayer has claimed $500 or more of this tax credit in any year prior to 2013, they may not claim any additional credit. For those that remain eligible, the tax credit can be applied to these energy retrofits.

Energy Retrofits that Qualify

  • Insulation – Additional insulation to walls, ceilings, or other part of the building envelope that meets the 2009 IECC specifications.
  • Windows – 10% of material cost, up to $200 for replacement windows, replacement skylights, and exterior doors that meet EnergyStar requirements. Windows must have a U-factor that is less than or equal to a 0.30 and a Solar Heat Gain Coefficient (SHGC) that is less than or equal to 0.30. Storm windows that meet U-factors listed in the International Energy Conservation Code (IECC) in combination with their paired external window are eligible (noting the correct climate zone). Storm doors paired with U-factor rated wood doors are eligible provided they don’t exceed the default U-factor requirement for the combination. See the 2009 IECC for details.
  • Window Films -The product must meet the requirements of a “qualifying insulation system” and be manufacturer certified.
  • Home Sealing – Sealing cracks in the building shell and ducts to reduce air leakage and heat loss in a manner consistent with the 2009 IECC.
  • Electric Heat Pump – Must yield an energy factor of at least 2.0 in the standard Department of Energy test procedure.
  • Natural Gas & Propane Furnaces – Credit of up to $150 for gas furnaces that exceed an Annual Fuel Use Efficiency (AFUE) 95. Oil furnaces and gas, oil and propane boilers must exceed an AFUE of 90 to be eligible. Central Air Conditioners and Air-Source Heat Pumps – Credit of up to $300 for units that meet the highest tier standards set by the Consortium for Energy Efficiency (CEE) as of February 17, 2009, which in most cases requires a Seasonal Energy Efficiency Ratio (SEER) of 15  or an Energy Efficiency Ratio  (EER) of 12.5.
  • Natural Gas, Propane, or Solar  Water Heaters – Must have an energy factor of at least 0.82 or thermal efficiency of at least 90 percent.

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