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Energy Tax Credit

How has the new Stimulus bill affected the tax credits for energy efficient home improvements?

On February 17, 2009, President Obama signed a stimulus bill (The American Recovery and Reinvestment Act of 2009) that made some significant changes to the energy efficiency tax credits. The highlights are:

  • The tax credits have been enhanced for 2009 and have been extended to 2010 as well.
  • The tax credit raised from 10% to 30% of the qualified project and includes installation costs. 
  • The tax credits that were for a specific dollar amount (ex $300 for a central air conditioner or heat pump system) have been converted to 30% of the installation cost.
  • The maximum energy tax credit has been raised from $500 to $1,500 for the two years (2009-2010).
  • Some improvements such as closed-loop geothermal systems, solar water heating, and solar photovoltaic panels are not subject to the $1,500 maximum credit and offer a 30% tax credit regardless of project price. (examples: a $3,000 tax credit for a qualified solar or geothermal project that costs $10,000 or a $15,000 tax credit for a qualified geothermal or solar system costing $50,000.)
  • The $200 cap on windows has been removed and can attain a maximum of $1500 tax credit where a window replacement project costs $5000.