Credit for Energy Efficient Appliances
Energy consumption is one of the leading economic issues in the United States, and it also has major environmental implications. The US government has created a variety of initiatives to reduce energy consumption, including tax credits for consumers who install energy efficient appliances. Taxpayers who qualify for credits may subtract credits from their income tax liability.
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Tax Credit Basics
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Tax credits for energy efficiency apply to certain home appliances, as well as other home improvements that promote reduced energy consumption. According to Energy Star, credits are available for appliances including air conditioning systems, heating systems, water heaters, biomass stoves, wind turbines and solar energy systems. Each type of home improvement must meet certain energy efficiency guidelines to qualify for a credit. Energy Star states that just because a certain product is Energy Star qualified, it doesn't necessarily mean it qualifies for tax credits.
Benefits
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Tax credits for energy efficient home appliances and other upgrades are beneficial to taxpayers in that they reduce the effective cost of installing improvements covered by the credits. Energy efficient improvements sometimes have higher initial installation costs than less efficient improvements; tax incentives can mitigate the cost difference and spur consumers to make more environmentally friendly improvements. From a broader economic standpoint, the tax credits may help alleviate the growing demand for energy.
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Time Frame
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Tax credits for energy efficiency have changed over time. Many credits were set to expire at the end of 2010 and were later extended, but the credit amounts changed. According to Energy Star, many improvements made before 2011 qualify for a credit of 30 percent of the cost of the improvement, up to a maximum of $1,500, while many improvements made after 2010 qualify for smaller, fixed credits.
Considerations
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If you are planning on installing a new home appliance, ask the vendor or contractor if it qualifies for a tax credit. Keep detailed records of any home improvements you make so that you can claim any credits you can on your tax return. Energy Star states that improvements apart from geothermal heat pumps, solar energy systems, fuel cells and wind turbines must be made on an existing, primary residence (not a newly constructed building or rental property) to qualify for tax credits.
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References
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