Federal Energy Efficiency Tax Credits for 2015-2016
If you made energy efficiency improvements to your home in 2015 or are thinking about some upgrades in 2016, you could be in luck.
The Consolidated Appropriations Act (passed by Congress in a rare bipartisan accomplishment and signed by President Obama in December 2015) retroactively renewed the Energy Efficiency Tax Credit for certain equipment installed in 2015 and extended it through December 31, 2016.
Be sure you flag this for your tax professional and engage a contractor now if you’re thinking about any of this work in 2016.
The following equipment installed in 2015 and 2016 is eligible for this tax credit. Note that the maximum tax credit for all improvements made in 2011 – 2016 is $500.
Building Envelope Improvements
Owners of existing homes may receive a tax credit worth 10% of the cost of upgrading the efficiency of the building’s envelope. Installation (labor) costs are not included and the credit is capped at $500 for all improvements. To be eligible for the credit, the improvement must meet the prescriptive requirements established for it under the 2009 International Energy Conservation Code (including supplements). The following improvements are eligible for the tax credit:
- Insulation materials and systems designed to reduce a home’s heat loss or gain
- Exterior doors and windows (including skylights) — no more than $200 in total credits can be claimed for windows in years 2006 – 2016 Equipment must meet version 6.0 Energy Star program requirements.
- Pigmented metal roofs designed to reduce heat gain, and asphalt roofs with appropriate cooling granules, which are Energy Star certified.
Heating, Cooling and Water-Heating Equipment
Taxpayers who purchase qualified residential energy-efficient property may eligible for a tax credit. The credit is equal to the full cost of the equipment up to the following caps:
- Advanced main air circulating fan: $50
- Natural gas, propane, or oil furnace or hot water boiler with an annual fuel utilization rate of 95 or greater: $150
- Electric heat pump water heater with an energy factor of at least 2.0: $300
- Electric heat pump which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
- Central air conditioner which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
- Natural gas, propane, or oil water heater which has either an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent: $300
- Biomass stoves that use “plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers”. Systems must have a thermal efficiency rating of at least 75 percent to qualify: $300