Federal Tax Credit for Energy Efficiency

Are you looking to save money and the environment at the same time? Well this is a reminder that the time is now to upgrade to a Qualifying Gas, Oil or Propane Water Heater as well as Electric Heat Pump Water Heater or Solar Water Heater. Time is passing fast, soon the Federal Tax Credit savings of 30% up to $1500 will be ending December 31, 2010. There is also a Federal Tax Credit for Energy Efficient Appliances such as Water Heaters, Wood Heat Stoves, Furnaces and Boilers, Heat Pumps, Pellet Stoves, Windows, Doors and Skylights.

If you know that any of your appliances that are listed above are on there last leg, you are better off replacing them now while you can still claim that tax credit. Since newer water heaters require less energy and time to heat the water this will help save you money and will help the enviroment in the long run, as well as shorten the waiting time between showers, dishes and laundry.

Gas, Oil, Propane Water Heaters must have an Energy Factor >= 0.82 or a thermal efficiency of at least 90%. You should consider an on demand Tankless Water Heater if your situation allows for it. You will need to have ready access to a good size gas pipe and exhaust vent for many models. Electric Heat Pump Water Heater requirements are the same as ENERGY STAR: Energy Factor >= 2.0.

This credit reduces the amount of tax you owe for 2009 or 2010. The credit is a reduction of total income tax at the bottom of your return, up to $1500. This tax credit is a non-refundable tax credit. Consult your tax adviser for details. Use it or lose it! Products must have been purchased between January 1, 2009 and December 31, 2010.

The tax credit is an aggregate, i.e., the total $1500 can include other energy efficient items. For instance, if a consumer claims $900 on a new stove, then he will have $600 to purchase additional energy saving products in the same tax year. If a taxpayer uses the entire $1500 tax credit on a competing product then they cannot use it for a biomass stove in that same tax year.

$1500 seems like the total credit for both 2009 and 2010 combined. Beware that those affected by the Alternative Minimum Tax (AMT) in 2010 may not qualify for the rebate unless Congress passes an AMT patch.

Double dip! Local utilities like PGE have their own rebates for Energy Efficient Appliances purchased in 2009. PGE has a $30 rebate for energy efficient water heaters. Gas water heaters with Energy Factor 0.62 or greater or Electric ones with Energy Factor 0.93 or greater.