5 Energy Efficiency Tax Credits for Your Home

Home improvements can be a costly undertaking but a necessary one for keeping your home both more modern and safe. Many homeowners upgrade their homes by installing top-of-the-line products, including those that are energy efficient. One of the most-recognized terms for energy efficiency is the ENERGY STAR label, which not only helps you save on your energy bill, but can also reduce your taxes, too!  ENERGY STAR products that qualify include everything from central air conditioning units and hot water boilers to insulation and roofs. To apply for these tax credits, first make sure you have your receipts and the Manufacturer's Certification Statements to verify your eligibility. (To qualify, the item must be installed in an existing home and be in your principal home.) Then, you’ll need to file IRS Tax Form 5695.

Here are a few of the ENERGY STAR products you may already have in your home.

Central Air Conditioning

Those recognized as “ENERGY STAR Most Efficient 2016” meet the tax credit requirement. While there’s no single list consumers may reference to verify eligibility, the unit must meet the following requirements:

Split Systems:

Seasonal Energy Efficiency Ratio/SEER>= 16

Energy Efficiency Ratio/EER >= 13

Package systems:

Seasonal Energy Efficiency Ratio/SEER >= 14

Energy Efficiency Ratio/EER >= 12

The tax credit amount is $300.

Hot Water Boiler (Gas, Propane, or Oil)

Those recognized as “ENERGY STAR Most Efficient 2016” meet the tax credit requirement. New construction and rentals do not apply. While there’s no single list consumers may reference to verify eligibility, the unit must meet the following requirements:

Annual Fuel Utilization Efficiency/AFUE >= 95

The tax credit amount is $150, which includes the installation costs.

Furnaces and Fans (Gas, Propane, or Oil)

Gas furnaces listed as “ENERGY STAR certified” (except those listed for U.S. South only) are eligible for the furnace tax credit. While gas and oil furnaces with fans listed as “ENERGY STAR” qualify for the fan tax credit. The furnace must be installed between January 1, 2011 and December 31, 2016 to qualify. While there’s no single list consumers may reference to verify eligibility, the unit must meet the following requirements:

Furnace:

AFUE > 95

Fan:

Annual electricity use < 2% of total furnace energy

The tax credit amount is $150 for furnaces and $50 for advanced main air circulating fans.

Insulation

Bulk insulation, such as batts, blow-in fibers, expanding spray, and rolls qualify. As do products that reduce air leaks, such as caulk, house wrap, spray foam, and weather stripping. The insulation must be installed between January 1, 2011 and December 31, 2016 to qualify.

The tax credit amount is 10 percent of the cost, up to $500. It does not include the installation costs, but you can install it yourself to receive the credit.

Roofs

ENERGY STAR-certified metal or asphalt roofs that are designed to reduce heat gain may qualify for the tax credit. ENERGY STAR says “metal roofs with appropriate pigmented coatings” and “asphalt roofs with appropriate cooling granules” will qualify. The roof must be installed between January 1, 2011 and December 31, 2016 to qualify. Roof coatings are not eligible, and neither are new constructions. Browse the Certified Roof Products database for more information, and browse for metal and asphalt (shingle or modified bitumen) roofs under “Product Type.”

The tax credit amount is 10 percent of the cost, up to $500. It does not include the labor costs.

For more information on 2016 federal tax credits, visit EnergyStar.gov’s Federal Tax credits web page, or go here for a current list of ENERGY STAR Most Efficiency in 2016.

Curious about pet-friendly tax credits? Review last year’s “5 Tax Breaks For Pet Owners.”