Energy-Efficiency Tax Credit Facts

The Existing Home Retrofit Tax Credit (Tax Code Section 25C): Tax credits are available at 30 percent of the cost, up to a $1,500 lifetime limit, for installation in 2009 & 2010 (for existing homes only) of these products:


Building envelope components Installation costs not included):

-Insulation material or system
-Exterior window, skylight, door, storm window or storm door with a U factor of .3 or below
-Metal or asphalt roofs that resist heat gain

Qualified energy products (Installation costs may be included):

-Electric heat pump water heaters that yield an energy factor of at least 2.0 in the standard Department of Energy test procedure.
-Electric heat pumps and central air conditioners that achieve the highest efficiency tier established by the Consortium for Energy Efficiency as of Jan. 1, 2009.
-Natural gas, propane or oil water heaters with an energy factor of at least .82 or thermal efficiency of at least 90 percent
-Biomass burning stoves with a thermal efficiency rating of at least 75 percent as measured using a lower heating value
-Natural gas and propane furnaces that achieve an annual fuel utilization efficiency rate of not less than 95
-Natural gas, propane, or oil water boilers and oil furnaces that achieve an annual fuel utilization rate of not less than 90
-Advanced main air conditioning fans with annual electricity use of no more than 2 percent of the total annual energy use of the furnace

The Wind, Solar, Geothermal and Fuel Cell Tax Credit (Tax Code Section 25D): Tax credits are available at 30 percent of the cost, with no cap through 2016, for existing homes and new construction, for:

-Geothermal Heat Pumps
-Solar Panels
-Solar Water Heaters
-Small Wind Energy Systems
-Fuel Cells

The energy-efficiency home products must be “placed in service” between Jan. 1, 2009 and Dec. 31, 2010. The credits are only valid for improvements made to the taxpayer's principal residence, except for qualified geothermal, solar, wind property, which can be installed on any home used as a residence by the taxpayer.


Home owners can claim the 25C and 25D credits on Form 5695 when they file their income tax returns. Check with your tax professional to ensure correct application of the energy-efficiency tax credit.

Retain all receipts as well as records that include:

-Name and address of manufacturer
-Identification of the class of eligible building envelope component
-Make, model number and any other property identifiers
-A statement that the component is eligible for the credit (may include U factor, class of window or door, etc.)

source: National Association of Home Builders