Fed Tax Credits Stimulate Your Bank Account Save Money and Energy

So you are feeling compelled to do something about the fact that your home heats and air conditions the outside almost as well as it heats and air conditions the inside–maybe better.  Too much money being wasted and too many CO2 emissions being created.  Rather than trying to guess where the leaks in your home are, you’ve had a professional energy auditor rate your home and advise you on what you need to do. 

Now it’s time to act.  Some fixes may be as simple and inexpensive as caulking or weatherstripping.  However if the fix requires the purchase of windows, a furnace or a/c unit, for example, there are some great federal and in some cases, state tax incentives that will help offset the cost.  President Obama’s stimulus package isn’t just for the fat cats.  There is something in it for you and me.   There is a 30% tax credit that can be used to make energy efficient home improvements for things such as insulation, roofs, doors, furnaces, hot water heaters, etc.  Now this is a one time tax credit with a maximum of $1,500. 

 The credit can only be claimed once in either 2009 or 2010.   So if,  for instance, you buy a $3,000 A/C unit in 2009, your tax credit would be $900.  Then you spend $2,000 on insulation which will give you a tax credit of $600.  These two improvements will max out your tax credit of $1,500.  So even if you also have new windows installed you can only claim the credit up to the $1500. And at least for now it’s a one time credit.  That could change of course as the Obama administration pushes for more ways for the country to conserve energy.  The EnergyStarwebsite explains in more detail which improvements qualify for the tax credit.  Be sure to bookmark the EnergyStar link because it has all the guidelines and some efficiency factors have changed.

Now if you really get adventurous and are thinking about geothermal or solar heat, the incentives really heat up, pun intended.  Either one or a combination of both of these options could reduce your energy costs by up to 70 percent.  They are relatively expensive to install but over years they more than pay for themselves.  The tax credit for these is 30% tax credit  with NO  limit on what you spend. The credit can be claimed until 2016.  So if you spend $10,000 on a solar system, for example, your credit is $3,000. 

Some state governments have incentives as well, so check with your state’s  Department of Taxation.  In Virginia , of instance, from October 9th through October 12th their will be no sales tax on certain energy efficient home improvements. Sales tax in Virginia is 5%.  This is modest but many states offer even more incentives.  Maryland as an array of state AND local (county) incentives for residents.  Do your homework before you purchase much needed energy saving products and services and take advantage of everything that’s available to save you money.

Be sure to watch the cute, short video on geothermal heating and cooling.