General Information

Frequently Asked Questions

General

Rebates, Deductions, and Credits - What's the difference?
Tax deductions reduce your overall taxable income with the value of the deduction dependent on your tax bracket. For example, if you are eligible for a $1,000 deduction and are in the 20% tax bracket, the deduction will reduce your taxes by $200. Tax credits, such as many of the incentives discussed on this web site, reduce the amount of tax you owe dollar for dollar. Rebates are simplified tax credits- instead of reducing the amount of tax you owe; rebates reduce the cost of a purchase, such as a new cell phone. Rebates on energy efficiency investments are offered by some utilities and states.

What paperwork or forms are needed to prove improvements were made, and where can I find them?
IRS forms can be found on the TIAP home page, www.energytaxincentives.org, and on the appropriate consumer or commercial pages. For the most part, taxpayers need to keep records of when the improvements were placed in service, the cost of materials/labor, and where appropriate the manufacturer's certfication that the product in question is eligible.

I made improvements to my home/purchased an eligible vehicle. Am I eligible for a tax credit?
The eligibility period for when measures are "placed in service" varies from measure to measure. Please see the individual pages for the various consumer and commercial incentives from the menu on the left for specifics.

I don't think I qualify for a federal-level incentive - where can I find information on state-level incentives?
TIAP provides information on several sources of state-level information. Some states have their own web sites set up, but for a comprehensive listing of information for state energy efficiency incentives, visit ACEEE's state policy database or the DSIRE database (efficiency & renewable incentives).

Who can I call for further questions about the tax incentives?
If you have questions regarding the information provided on this site, please email TIAP at tiap@aceee.org. The Department of Energy also has a helpline, at 1-800-dial-DOE.

How do the federal tax incentives interact with credits or rebates provided by my state or utility?
For purchases made after December 31, 2008, federal incentives are unaffected by other credits or rebates; the federal incentive is calculated based on the full cost you paid.

Prior to January 1, 2009, for federal credits that depended on the cost of a measure (e.g. upgrades to existing homes and solar energy systems), the federal credit would generally be calculated after deducting the value of utility or state incentives. For example, if upgraded insulation cost $1500 and was eligible for a $300 state credit, the federal credit is calculated on the cost after subtracting the state credit. In this example, the federal credit would be $360, which is 30% of the net cost of $1200 after the state credit would be subtracted. For more information please contact your state energy office or local utility.

How will the Alternative Minimum Tax affect me?
For 2009 the consumer credits can be taken against the AMT. The on-site renewable incentives can also be used to offset the AMT. To determine how AMT will impact you, we recommend that you speak with a tax professional.

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Consumers

I made improvements to my home. What incentives are available to me?
Many of the original EPAct 2005 incentives for consumers expired at the end of 2007. Congress has extended or renewed these incentives for 2009 and 2010, however they are not retroactive to 2008. The only incentives for consumers that have been extended seamlessly (as they originally expired at the end of 2008) are for the installation of solar PV or solar water heating systems, fuel cell systems, or for the purchase of qualifying vehicles.
For more information, see www.energytaxincentives.org/general/legislative.php and check the individual measures pages from the menu on the left for details. You can also look for state-level incentives at www.dsireusa.org.

I heard that my state has an Energy Star appliance rebate program. How can I find out more information?
Under the American Recovery and Reinvestment Act of 2009 (ARRA), the U.S. Department of Energy (DOE) is providing $300 million to U.S. states, U.S. territories and the District of Columbia, creating rebate programs for new energy-efficient appliances that replace existing appliances in homes. Each state and territory has designed its own program - see www.dsireusa.org for specifics for your state.

I installed new home envelope components, heating and cooling, or water heating equipment between January 1 and February 16, 2009 - or windows and skylights before June 1. With the new legislative changes, what incentives apply to me?
The ARRA legislation (stimulus) that was signed into law on February 17, 2009 increased the efficiency standards for several of the consumer incentives. The current standards are detailed on the home envelope and heating/cooling pages.

What is the limit for consumer tax credits capped at?
The total credit that you can claim for 2009 and 2010 is limited to $1,500*. This corresponds to $5,000 of expenditures, since the credit rate is 30%. This is in addition to the $500 that some consumers may have taken for improvements made in 2006-2007.

*Not including incentives for qualifying vehicles and on-site renewable installations.

Which climate zone am I in?
Climate zone information from the International Energy Conservation Code 2009 (PDF).

Where can I find a list of energy consultants?
Consumers can find certified home energy raters through the Residential Energy Services Network (RESNET) web site.

Which water heaters qualify for a tax credit?
If your water heater was installed between January 1, 2009 and December 31, 2010, you may be eligible for an incentive if the water heater meets the necessary energy efficiency level. Electric heat pump water heaters with an Energy Factor of 2.0 and gas/oil water heaters with an Energy Factor of 0.82 or a thermal efficiency of at least 90% qualify for a tax credit worth 30% of the cost of the unit (within the $1,500 cap for all measures combined).

What is the status of tax credits for corn, pellet or wood-burning stoves?
Under the energy incentives extension passed in 2008, there is a provision for a credit for the use of biomass for heating or water heating purposes. Click here for details.

How efficient does my new furnace or boiler have to be in order to qualify for a credit?
Furnaces have to meet an Annual Fuel Use Efficiency (AFUE) of 95 or better, boilers an AFUE of 90 or better, as defined in DOE test procedures. The exception to this rule is that units with an efficient furnace fan, i.e. one that meets the CEE/AHRI specification can earn a credit regardless of their AFUE. Click here for details.

What is considered a qualified ground-source heat pump, or a qualified ground-source heat pump expenditure?
Qualified geothermal heat pump property is defined as any equipment that uses the ground or ground water as a thermal energy source to heat the taxpayer's dwelling unit, or is used as a thermal energy sink to cool said dwelling unit, and meets the requirements of the Energy Star program at the time the unit is placed in service. Qualified expenditures include any expenditure for qualified geothermal heat pump property installed on or in connection with a dwelling unit used as a residence by the taxpayer. Click here for more information on the geothermal heat pump incentive.

I own an apartment building or vacation home. Do the improvements I have made within the building qualify for a credit?
Owners of vacation homes or rental properties cannot claim the consumer credits (IRS Code section 25C(c)(1)(A)). Some rental property owners may qualify for tax deductions under the commercial building tax deduction for buildings greater than 3 stories.

I live in a condo. Can I get the credit for costs paid by the condo association?
Yes, ask your homeowners association to report your share of the cost. Same if you live in a co-op.

Can I receive a tax credit for a programmable thermostat?
Credits are not available for programmable thermostats at this time.

Where can I find rebate information for my ENERGY STAR-rated product?
Information on rebates for these products can be found here.

How do I know what type of window I need to qualify for a tax credit?
Eligible window products are those that are rated equal to or below a 0.30 U Factor and a Solar Heat Gain Coefficient (SHGC) of 0.30. For more information on qualifying products in your climate zone, visit the Efficient Windows Collaborative web site.

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Businesses and Non Profits

Are there any benefits or incentives available for publicly-owned buildings?
For publicly-owned buildings, the tax deduction can be assigned to the designer of the building. A public agency could assign the credit to the building designer, negotiate a fee reduction and so realize the credit in that way. Designers are defined by IRS Notice 2006-52 as "a person that creates the technical specifications for installation of energy efficient commercial building property...for example, an architect, engineer, contractor, environmental consultant or energy services provider... A person that merely installs, repairs or maintains the property is not a designer." In March 2008 the IRS released new rules clarifying several aspects of the commercial building energy efficiency tax deduction.

What programs exist to reduce green building costs for non-profits which are not eligible for tax credits?
Please visit the State and Utility incentives section of this site, or check with your local utilities and state energy office for more information.

Are tax credits available for industrial manufacturers?
Industrial manufacturers are eligible for tax incentives for CHP systems, solar systems, fuel cells, and microturbine equipment.

Where can I find out more about commercial building incentives?
The Commercial Building Tax Deduction Coalition (CBTDC) has a web site that includes a comprehensive list of frequently asked questions.

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New Homes and Buildings

Does the builder credit only apply to new homes?
Yes, the builder credit only applies to new homes. For existing homes, the energy efficiency credits go to the individuals who own the property as their principal residence. The on-site renewable incentives can be applied to any dwelling unit owned by the taxpayer, not necessarily their primary residence.

I am building a new home - are there incentives for me?
See the Energy Star response to this question here.

Is there a pass-through option for federal green building incentives, and what is the process to apply for these incentives?
Designers of buildings owned by public entities, i.e. state and local governments, can qualify for the deduction for commercial buildings. The rules have yet to be written, however we assume that the design firm of record, such as the architecture or engineering firm that files the design drawings with the local jurisdiction, would be the eligible party. They might contract with an energy expert to do the energy design work, but that would be a private contract issue.

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Passenger and Commercial Vehicles

When will an official statement be made? Who will make that statement? Will it be posted on a particular website?
On January 13, 2006, the IRS released interim guidance on tax credits for light-duty hybrid and diesel vehicles. For information on which models are eligible and the amount of credit available, see ACEEE's Light-Duty Vehicle and Heavy-Duty Vehicle incentive information. Information on the new plug-in electric vehicle credits will be available soon.

The ACEEE web site states that the credit amounts in your table are estimates. Where can I find the definitive credit amounts?
Once the manufacturer's determination of the credit amount for a given vehicle has been submitted to and approved by the IRS, the manufacturer will be able to post definitive credit amounts that the purchaser can rely upon to claim the credit. To date, credit amounts for certain GMC, Chevrolet, Honda, Toyota, Lexus, Saturn, Ford and Mercury vehicles have been approved by the IRS. These models are identified in ACEEE's "Light-Duty Hybrid and Diesel Vehicle Tax Credits in the Energy Bill." As the IRS acknowledges further manufacturer certification, this information will be updated both on the ACEEE page and on the TIAP Web site.

What forms do I need to apply for this credit?
See the Vehicles section of this website.

Is this a tax credit or a tax deduction? What's the difference?
Hybrid vehicle purchases were previously eligible for a tax deduction of up to $2000. As of January 1, 2006, purchases of qualified hybrids are eligible for a tax credit. A tax deduction reduces your taxable income; a tax credit is subtracted from the tax you owe.

I heard something about 60,000 vehicles. How exactly does that work?
Once a manufacturer has sold 60,000 qualifying hybrid vehicles, the amount of the tax incentive will decrease as follows: In the quarter that the manufacturer sales reach 60,000, the credit will remain 100%. In the first quarter after this, the credit will stay at 100%. In the second quarter after, the credit diminishes to 50% of the full amount. In the fourth quarter after, the credit is cut to 25%. By the sixth quarter after the manufacturer sells 60,000 qualifying vehicles, the credit will no longer be available for vehicles made by that manufacturer. Numbers for plug-in electric vehicles are somewhat different, however the phase-out of the incentive will work in the way described above.

How will the IRS know when the 60,000th hybrid is sold? How will consumers be able to find that out?
IRS guidance requires a manufacturer of qualified vehicles to report quarterly on sales of those vehicles. IRS will formally acknowledge these reports, allowing manufacturers and their dealers to inform purchasers whether credits are still available, and the percentage of the applicable vehicle's full credit amount, based on the date the vehicle was sold. Quarterly reports received by the IRS can be found on the IRS webpage "Summary of the Credit for Qualified Hybrid Vehicles." Details of the phase-out for individual manufacturers and models can be found at Fueleconomy.gov.

Can a business receive the credit? How about a tax-exempt entity?
Businesses are allowed to receive credits, but the amount of the credit may be limited by business-related tax laws. A tax-exempt entity may benefit indirectly from the credits through a provision that allows the seller of the vehicle to claim the credit in this case. The seller is required to disclose the amount of the credit to the tax-exempt purchaser, who may be able to achieve a reduction in the purchase price as a result.

Will the tax credits apply to used vehicle purchases?
The credits are not available for used vehicle purchases.

I will be replacing a hybrid with a new hybrid; am I still eligible for the credits? (i.e., Are the tax credits dependent upon what type of car you are replacing?)
The availability and amount of the credit are unrelated to the type of car that the purchaser is replacing.

Does the tax credit apply to a lease? If so, is the credit for the lessee or the lessor?
The IRS states in its January 2006 guidance that it expects to issue guidance later on "rules under which lessors may claim the credits." It is our understanding that the lessee (i.e., the person who will drive the vehicle) will not be eligible for credits.

Last updated 03/10/2010

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