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New Energy Efficiency Tax Credits Take Effect

January 3, 2006 - 9:05am


WASHINGTON, DC - The energy efficiency tax credits signed into law by President George W. Bush have gone into effect, making it easier for American families and businesses to reduce energy costs at home, work and on the road.  The various tax credits designed to improve America's energy efficiency went into effect on January 1, 2006 and are available for the purchase and installation of energy efficient appliances and products, as well as the purchase of fuel efficient vehicles such as hybrids.

"While there are easy, immediate steps that families can take to reduce their energy bills - like turning down the thermostat or weather stripping doors and windows - these tax credits will help with the purchase of bigger ticket items," said Energy Secretary Samuel W. Bodman.  "By reducing overall energy demand one family or business at a time we are also increasing America's energy security."

The energy efficiency tax credits will allow consumers to reduce their 2006 tax bills on a dollar-for-dollar basis up to the amount allowed under the law.  For example, consumers who purchase the most fuel-efficient vehicles could reduce their tax liability by up to $3,400, while those who install certain products such as energy-efficient windows, insulation, doors, roofs and heating / cooling equipment in the home can receive up to $500 off of their federal tax bills.

Specific tax benefits for the home include:

  • $50 for purchasing an advanced main air circulating fan;
  • $150 for installing a highly efficient furnace or boiler;
  • $200 for installing energy efficient windows;
  • $300 for purchasing a highly efficient central air conditioner, heat pump or water heater;
  • 30 percent, or up to $2000, for the purchase of solar water-heating equipment (this does not  apply to equipment used to heat swimming pools or hot tubs). 

Businesses may be eligible for credits such as:

  • 30 percent tax credit for the installation of qualifying solar equipment on buildings;
  • Business tax credits for companies that build highly energy efficient homes;
  • Credits for companies that manufacture energy-efficient appliances such as dishwashers, clothes washers and refrigerators.

The energy efficiency tax credits were signed into law in August, 2005 as part of the first comprehensive energy legislation in over a decade.  The landmark energy bill contains provisions to promote greater energy efficiency and conservation, improve the reliability of electricity delivery, and encourage increased domestic energy production, including energy from renewable sources such as biomass and wind.

Media contact(s):

Mike Waldron, 202/586-4940