Specifications for Energy Tax Credit Windows

To promote energy-efficient renovations of existing houses, Congress passed laws starting in 2006 offering tax credits for certain approved renovations, including energy-efficient windows. Because energy efficiency differs depending on regional climate, determining whether your renovations meet requirements for this tax credit can be complex. In addition, certain credits have a lifetime cap including those related to energy-efficient windows. Even approved windows may not get you a credit if you've claimed other energy-efficient credits in the past.

Basic Requirements

In order to qualify for any energy tax credit reimbursements, you must install windows in your existing primary residence. In addition, you must install the windows between June 1, 2009 and December 31, 2011. Note that the IRS has two slightly different tax credit programs covering energy-efficient windows, with the first one ending on December 31, 2010 and the second starting on January 1, 2011. Most importantly, new installed windows must meet Energy Star specifications appropriate to your dwelling's region.

Regional Differences and Energy Star Window Ratings

Energy Star defines different regions according to differing requirements for energy efficiency depending on climate. In warmer climates, for example, it makes sense to protect more against heat, while in cooler climates, it makes more sense to protect against cold and allow more heat in. Two different measurements determine Energy Star ratings. The U-factor, a measure of how efficiently windows prevent heat loss from inside the window, should be lower in cooler regions and higher in warmer regions. The Solar Heat Gain Coefficient, or SHGC, should allow a larger amount of external heat to pass through windows in the cooler regions, and less in warmer climates. Energy Star specifications require SHGC to be higher in cooler areas and lower in warmer regions.

Energy Star Specifications

Energy Star specifications are divided into four region-specific categories: North, North-Central, South-Central and Southern. Windows for each of these regions must fit the following specifications. For North, you need windows with a U-factor equal to or less than 0.30, or equal to 0.31 with SHGC greater than or equal to 0.35, or equal to 0.32 with SHGC greater than or equal to 0.40. For North-Central, you need windows with a U-factor equal to or less than 0.32 and an SHGC less than or equal to 0.40. For South-Central, you need windows with a U-factor less than or equal to 0.35 and an SHGC less than or equal to 0.30. For Southern, you need windows with a U-factor less than or equal to 0.60 and an SHGC less than or equal to 0.27.

Energy-Efficient Window Ratings Regions

The Northern band roughly covers New England down to Pennsylvania and most of the northern half of the United States. The North-Central band covers part of California, all of Virginia and Kentucky, and a narrow band containing parts of other states from Delaware to Arizona. The Southern band covers most of Florida and large portions of Louisiana and Texas, as well as part of Georgia, the Gulf Coast, and a southern section of Arizona, while the South-Central band covers parts of California, Nevada, Utah and Arizona as well as the rest of the South. To determine what band your home falls in, consult the Energy Star website.

Amount of Energy Tax Credit Available

You are eligible for a tax credit equal to 10 percent of the cost of windows, excluding labor, up to $500. The $500 represents a lifetime cap on all small-renovation energy-efficiency tax credits claimed between 2006 and 2011. If you have an earlier energy-efficiency tax credit, you probably will not be eligible for the full $500. Small-renovation projects include HVAC upgrades, roofing, insulation, water heaters, biomass stoves, and windows and doors. Other larger projects, like solar power upgrades, may be eligible for different tax credit programs. If you have claimed any energy-efficiency credits since 2006, consult a tax professional or call the IRS to determine your eligibility for future credits.

Claiming Your Tax Credit

To claim your tax credit, file form 5695 for Residential Energy Credits with your regular taxes. Ensure that the form you file is the correct form for your year; as of October 2011, the 2011 form is not yet available on the IRS website. Married filing separately couples may be able to claim more than one credit in some cases. This is a nonrefundable credit, so you will only be able to claim up to the amount of tax owed. However, you may be able to carry over credits from this amount to other years. If you find yourself in these special circumstances, you should consult a tax professional for specific advice. In addition, you must obtain a receipt from the contractor installing your windows that itemizes materials and labor; this tax credit applies to materials only.

References

• Energy Star: Energy Star and the Tax Credit
• Forbes: New $1,500 Window Tax Credit Has A Catch
• IRS.gov: Form 5695 -- Residential Energy Credits
• Energy Star: 2011 Federal Tax Credits for Consumer Energy Efficiency
• Houselogic: Claim Your Residential Energy Tax Credits
• Energy Star: What Makes It Energy Star?

Resources

• Energy Star: Climate Zone Map