Federal Tax Credits and Weatherization 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.
According to the American Council for an Energy-Efficient Economy:
For 2011, home improvement tax incentives will revert to the 2005-2008 levels: 10% of the cost of insulating, installing efficient windows, replacing old furnaces and air conditioners and making other home energy efficiency improvements. The incentive will be capped at $500, rather than $1,500, and anyone who has previously taken advantage of the program can't apply for incentives that exceed $500. (In other words, if you claimed $500 back in 2005 when you insulated your floors, or $1,500 in 2009 when you replaced windows, you have exhausted your tax credit; if you only claimed $300 in 2005, let's say, you can still claim $200, for a total of $500). This is unfortunate for sure, please lobby your congress person to make them aware of your displeasure.
ABOUT TAX CREDITS
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Consumers can itemize purchases on their federal income tax form, which will lower the total amount of tax they owe the government.
Fuel-efficient vehicles and energy-efficient appliances and products provide many benefits such as better gas mileage –meaning lower gasoline costs, fewer emissions, lower energy bills, increased indoor comfort, and reduced air pollution.
In addition to federal tax incentives, some consumers will also be eligible for utility or state rebates, as well as state tax incentives for energy-efficient homes, vehicles and equipment. Each state’s energy office web site may have more information on specific state tax information.
Below is a summary of many of the tax credits available to consumers. Please see the ENERGY STAR® page on Federal Tax Credits for Energy Efficiency for more details on federal incentives and the Database of State Incentives for Renewables and Efficiency (DSIRE) for information on federal, state, local, and utility incentives.
Another round of multi-billion dollar incentives has been introduced in congress termed "Cash for Caulkers". This program would provide additional incentives to home owners to weatherize their homes. We will continue to stay on top of the status of this program and provide further details as they become available. While the House of Representatives passed their version of this bill in May of 2010, the Senate has yet to pick this debate up. And President Obama did not discus it during his 2011 State of the Union address. We can only hope that this becomes a hot topic again as energy prices begin to rise again, which it appears they are doing now.
Home Weatherization Assistance Programs
The Weatherization Assistance Program helps state and local agencies provide weatherization services to over 100,000 low-income households annually. Qualification for this program is defined as 200% of the annual defined poverty level. Please review here for further eligibility guidelines.
The Weatherization Assistance Program reduces the energy expenditures of low-income families by increasing the energy efficiency of their homes. Clients receive a series of cost-effective measures that are tailored to their homes and climate. The typical services include window and insulation replacement, a new HVAC system, energy efficient appliances and possibly even renewable energy systems. The average per household grant amount for 2011 is estimated to be at $6,572. Yes, that means that if you qualify you can receive $6,572 worth of home improvements for free through this program.
I have personally been involved with this program in Illinois and the benefits to the homeowner is extraoridinary. Using your preferred search engine, use keywords "weatherization and your home state".
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