Federal Tax Credits for Consumer Energy Efficiency

If you purchase an energy-efficient product or renewable energy system for your home, you may be eligible for a federal tax credit. Below you will find an overview of the federal tax credits for energy efficiency.

Revamped Existing Home Retrofit Tax Credit (25C)

25C tax credit refunds 30 percent of the product replacement cost up to a total of $1,500 expires December 30, 2010. It can be used not only for HVAC systems, insulation and water heaters but also for windows and doors and insulation as long as the new products meet IRS qualifications. In some cases, installation costs may also be used to claim the tax credit.  For more information and how to apply  click here.

Wind, Solar, Geothermal and Fuel Cell Tax Credit (25D)

25D credit for renewable energy products now provides larger incentives for installing geothermal heat pumps, solar panels, solar hot water heaters, small wind energy systems and fuel cells. Although the upfront costs are high for these products, the tax credit is 30 percent and there is no cap on their cost through 2016.  

Taxpayers can claim the credits on IRS Form 5695. 

More specific information on these two credits can be found at www.nahb.org/efficiencytaxcredit.  This site includes how to file for the tax credit and a summary of product types and tax credit specifications.