Solar energy systems are among the renewable and efficiency purchases that are eligible for tax credits. | Photo courtesy of Industrial Solar Technology Corp.
Tax season comes to a close today, and if you missed the energy efficiency and renewable energy tax credits for 2012, you can fortunately still take advantage of them next year. If you saw our recent blog on the Extended Federal Tax Credits for Energy Efficiency, you know that the majority of these tax credits were continued through the end of 2013 or 2016.
Below we have defined a list of energy efficient home improvement and appliance additions you can make to your home this year to save money on your next tax return. Application instructions for all of the Federal Tax Credits listed can be found on the ENERGY STAR® website.
Hot water is an expensive commodity, and your old water heater may be racking up your electric or gas bill on a daily basis. Heating water accounts for 14-25% of your home’s energy consumption, so a highly-efficient electric or gas water heater can save a lot of money. A new ENERGY STAR®-qualified water heater (look for the label) is eligible for a tax credit of $300, a hefty savings.
Central Air Conditioners
Summer is just around the corner and air conditioning is a must-have for many residences. If you’re looking to upgrade your old Central Air Conditioning (CAC) unit, a $300 federal tax credit for the cost can be used on specific ENERGY STAR models of CACs purchased by December 31, 2013. In addition, rebates for CACs can be found in most states. ENERGY STAR-labeled air conditioners are 15% more efficient than most conventional models. You can find an entire list of Energy Efficiency Rebate Programs for air conditioners at DSIREusa.org.
Windows and Doors
Tax credits for windows and doors are also available. The tax credit will repay 10% of the cost up to $500. Windows are capped at $200. Full replacement of windows or doors in the home is not required to receive the tax credit. Better yet, you can add a window or doorway to your home and still be eligible to apply.
Insulation and Air Sealing
Insulation and air sealing is eligible for a tax credit of 10% of the cost up to $500. These measures are some of the most cost-effective energy efficiency improvements you can make; they can reduce unwanted air flow in and out of your home and help control your home’s climate, saving you energy and money.
Renewable Energy Systems
If you are interested in renewable energy systems but budget is a concern, now is the time to take advantage of tax credits. Solar energy systems, wind turbines, and geothermal heat pumps are still items to consider for the next several years. Each can improve your home’s carbon footprint while producing your own electricity, heating, cooling, or hot water. Arguably the most valuable federal tax credit for energy efficiency, these systems are eligible for tax credits of 30% of the total cost, with no dollar cap, and they are available through 2016.
Be sure to check out ENERGY STAR for more details on these tax credits, and start making plans for your spring and summer energy efficiency improvements now! Next tax season, you'll be glad you did.