Overview of Federal Tax Incentives for Energy Saving Measures

There are federal tax incentives of 30% or up to $1,500 on six categories of energy saving devices through December 31, 2010. The benefits are for existing, principal residences only, with new construction and rentals ineligible. Applicable technologies include:

Biomass stoves with a thermal efficiency rating of at least 75%. (Benefit includes the cost of installation.)
Advanced main air circulating fans using at least 2% of the total energy of the furnace.

Home insulation including batts, rolls, blow-in fibers, rigid boards, expanding spray, and pour-in-place products. Weather stripping, spray foam in a can, caulk designed to provide an air seal, and house wrap can also be included with Manufacturer's Certification Statement. (The credit does not include the cost of installation.)

Roof products that reduce the surface temperature by up to 100 degrees including metal roofs with appropriate pigmented coatings and asphalt roofs with appropriate cooling granules. (Cost of installation not included in the benefit.)
Water heaters (gas, oil, and propane) with an energy factor (an overall measure of the appliance's efficiency) of = 0.82 or a thermal efficiency of at least 90%.

Electric Heat Pump water heaters are also covered with an energy factor of = 2.0. (All applicable credits include the cost of installation.)
(Storm) windows and doors installed in combination with existing units. Must have a U-factor (measurement of the degree of heat kept from escaping) and a SHGC (measurement of heat blocked from sunlight) of 0.30 or below. (Credit does not include cost of installation.)

There are federal tax incentives of 30% with no upper limit on three categories of energy saving devices through December 31, 2016. These apply to existing homes and new construction that are principal or second residences. Rentals are not eligible.

Geothermal heat pumps used for both heating and cooling. (Closed and open loop systems, and direct expansion units all have different limits for coefficient of performance and energy efficiency ratio. Be sure to check specifics for each.) The credit includes installation costs.

Small residential wind turbines with a capacity of no more than 100 kilowatts. (Installation costs included.)

Solar water heaters and solar panels certified by the Solar Rating & Certification Corporation. (In the case of PV panels, at least half of the energy in the qualifying property must come from the sun.) The credit can be applied to the cost of installation.

Finally, homeowners can qualify for an incentive of 30% or up to $500 per .5kW of power capacity for residential fuel cell systems. This credit, which applies to existing homes and new construction (principal residence, no second homes or rentals), will expire on December 31, 2016. The credit does include the cost of installation.

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