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U.S. Department of Energy Energy Efficiency and Renewable Energy

Tax Credits for Energy Efficiency

If you purchase an energy-efficient product or renewable energy system for your home, you may be eligible for a federal tax credit. Below is an overview of the federal tax credits for energy efficiency that are currently available.

While some energy efficiency tax credits are available through 2011, others are available through 2016 as noted below. In addition, tax credits were available in 2009 and 2010 which can still be claimed on your 2010 taxes. Learn more about the tax credits that expired at the end of 2010.

How to Claim Your Tax Credit

  • Visit the IRS website to obtain the correct forms for the tax year you are filing.
    • For example, claim improvements made in 2010 on your 2010 taxes, filed by April 18, 2011.
  • Use the following forms:
    • For renewable and efficiency credits: IRS Form 5695.
    • For alternative motor vehicle credits: IRS Form 8910. Also download instructions for form 8910.
    • For qualified plug-in electric drive motor vehicle credits: IRS Form 8936.
  • Save your receipts, or make copies of them, and the Manufacturer Certification Statement for your records.
  • NOTE: The credits are nonrefundable—in other words, the credits are only available to the extent you have a tax liability. The credits for home energy improvement products eligible through 2011 may be limited if you are subject to the AMT.
  • Tax credits can only be claimed once, and are limited to the year in which they are purchased: If you claimed a home energy improvement tax credit on your 2010 taxes, you cannot take an additional credit for the same purchase on your 2011 taxes.
  • There is a $500 lifetime limit on the federal tax credits that expire in December 2011 (not those that expire in 2016). If you have received a total of $500 or more in these tax credits from 2006-2010, you are not eligible for any more.

Products Eligible for Tax Credits Through 2011

These credits are documented in Part I of IRS form 5695 as "Nonbusiness Energy Property Credits."

Biomass Stoves

Photo of wood pellets stored in a wood pellet stove.

Credit: ©iStockphoto.com/JillKyle

Credit: $300

When and Where:

  • 2011 only
  • Existing primary residence

  • See details

    Product Requirements More Information
    Biomass stoves

    Thermal efficiency rating of at least 75% as measured using a lower heating value.

    Credit includes installation costs.

    Biomass stoves burn biomass fuel to heat a home or heat water. "Biomass fuel" includes agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers.

    Learn more about:

HVAC

Photo of a hand pressing buttons on a programmable thermostat.

Credit: ©iStockphoto.com/Kameleon007

Credit: See details

When and Where:

  • 2011 only
  • Existing primary residence

  • See details

    Product Requirements More Information
    Central Air Conditioning
    Credit = $300

    Split Systems:
    EER >=13; SEER >= 16

    Package systems:
    EER >= 12; SEER >= 14

    Credit includes installation costs.

    Learn more about:

    You may need to replace both your heating and cooling systems to qualify for the tax credit. Learn why.

    Not all ENERGY STAR products qualify.
    Electric Heat Pumps
    Credit = $300

    Split Systems:
    HSPF >= 8.5; EER >= 12.5; SEER >= 15

    Package systems:
    HSPF >= 8; EER >= 12; SEER >= 14

    Credit includes installation costs.

    Learn more about:

    Not all ENERGY STAR products qualify.
    Furnaces and Boilers
    Credit = $150

    Natural Gas or Propane Furnace: AFUE >= 95
    Oil Furnace: AFUE >= 90
    Gas, Propane, or Oil Hot Water Boiler: AFUE >= 90

    Credit includes installation costs.

    Learn more about:

    Not all ENERGY STAR products qualify.
    Advanced Main Air Circulating Fan
    Credit = $50

    No more than 2% of furnace total energy use.

    If the fan is qualified but the furnace is not, you can get a 30% tax credit on the cost of the fan alone. Ask your contractor to break out the cost.

Insulation

Photo of a man applying weatherstripping to the edge of a door.

Credit: ©iStockphoto.com/DonNichols

Credit: 10% of the cost, up to $500

When and Where:

  • 2011 only
  • Existing primary residence

Roofing

Photo of a man working on a roof.

Credit: ©iStockphoto.com/Ju-Lee

Credit: 10% of cost, up to $500

When and Where:

  • 2011 only
  • Existing primary residence

  • See details

    Product Requirements More Information
    Metal roofs, asphalt roofs

    All ENERGY STAR qualified metal and reflective asphalt shingles.

    Materials only; installation or labor costs are not eligible for the 10% tax credit.

    The credit is for "Any metal roof or asphalt roof installed on a dwelling unit, but only if such roof has appropriate pigmented coatings or cooling granules which are specifically and primarily designed to reduce the heat gain of such dwelling unit."

Water Heaters (non-solar)

Photo of a man working on a water heater.

Credit: ©iStockphoto.com/Andrew_Howe

Credit: $300

When and Where:

  • 2011 only
  • Existing primary residence

  • See details

    Product Requirements More Information
    Gas, Oil, Propane Water Heater

    Energy Factor >= 0.82 or a thermal efficiency of at least 90%.

    Credit includes installation costs.
    Electric Heat Pump Water Heater

    Energy Factor >= 2.0.

    Credit includes installation costs.

    Learn more about heat pump water heaters.
    All ENERGY STAR heat pump water heaters will qualify.

Windows, Doors, and Skylights

Photo of two windows on a house.

Credit: ©iStockphoto.com/Skyak

Credit: 10% of the cost, up to $500, but windows are capped at $200

When and Where:

  • 2011 only
  • Existing primary residence

Products Eligible for Tax Credits Through 2016

These credits are documented in Part II of IRS form 5695 as "Residential Energy Efficient Property Credit."

Tax credits for these products are available at 30% of the cost, with no upper limit, through 2016 (Select "See Details" for more information on each product, or see the printable version).

Geothermal Heat Pump

Photo of two geothermal heat pump—two tall rectangular boxes with pipes and tubes coming out the top of each.

Credit: Bruce Green

Credit: 30% of cost, with no upper limit

When and Where:

  • Must be "placed in service" by Dec. 31, 2016
  • Available on principal home or second home.
  • New and existing homes

Solar Energy Systems

Photo of solar panels on the roof of a home.

Credit: Cheryl Unger

Credit: 30% of cost, with no upper limit

When and Where:

  • Must be "placed in service" by Dec. 31, 2016
  • Available on principal home or second home.
  • New and existing homes

  • See details

    Product Requirements More Information
    Solar Water Heating Property

    At least half of the energy generated by the "qualifying property" must come from the sun.

    The system must be certified by the Solar Rating and Certification Corporation (SRCC).

    Credit includes installation costs.

    Learn more about solar water heaters.
    All ENERGY STAR solar water heaters qualify.

    The water must be used in the dwelling. The credit is not available for expenses for swimming pools or hot tubs.

    Tax credits are only available for the solar water heating system property, not the entire water heating system of the household.
    Photovoltaic Systems (Solar Electric Property)

    Photovoltaic systems must provide electricity for the residence and must meet applicable fire and electrical code requirement.

    Learn more about:

Wind Energy Systems

Photo of a home with a small wind turbine behind the garage.

Credit: Bergey WindPower

Credit: 30% of cost, with no upper limit

When and Where:

  • Must be "placed in service" by Dec. 31, 2016
  • Available on principal home or second home.
  • New and existing homes

  • See details

    Product Requirements More Information
    Residential Small Wind Turbines

    Nameplate capacity of not more than 100 kilowatts.

    Credit includes installation costs.

    Learn more about:

Fuel Cells

Photo of a man examining one of three fuel cells. The fuel cells are tall boxes, roughly six feet tall and three feet wide, with a round panel on the front.

Credit: Capstone Turbine Corporation

Credit: 30% of cost, up to $500 per .5 kW of power capacity

When and Where:

  • Must be "placed in service" by Dec. 31, 2016
  • Primary residence
  • New and existing homes

  • See details

    Product Requirements More Information
    Residential Fuel Cell Systems

    Efficiency of at least 30% and must have a capacity of at least 0.5 kW.

    Credit includes installation costs.

Vehicle Tax Credits

Tax credits are also available for some vehicles (Select "See Details" for more information on each product, or see the printable version).

Plug-In Electric Vehicles

Photo of a hybrid electric vehicle.

Credit: ©iStockphoto.com

Credit: Varies, see below.

When:

  • See below; credits phased-out after certain number of vehicles are sold.

  • See details

    Product Requirements More Information
    Plug-in electric and small neighborhood electric vehicles

    Credit: Up to $7,500, based on capacity of the battery system.

    The first 200,000 vehicles sold get the full tax credit before the credit begins phasing out. Use IRS Form 8936.

    See Fueleconomy.gov to find out which vehicles qualify for the credit.

    See the IRS information on the Plug-in Electric Vehicle Credit.

    Also see credits for alternative fuel vehicle refueling property.

You May Be Eligible for Additional Incentives

The tax credits listed here are federal tax credits.
These can be combined with other state, local, and utility incentives.

Note: This summary is for informational purposes only and should not be considered official tax information. Please see the IRS web site for official tax guidance.

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