Tax Credit Information

There are several programs that give tax credits for building energy-efficient structures or for adding energy-efficient features. Energy-efficiency pays, now more than ever. Here’s a summary of the available programs and where to go for more information:


Tax Credit for Existing Home Energy Efficiency Improvement

What: Tax credits equal to 10% of the material costs paid by the taxpayer for qualified energy-efficient improvements installed from January-December 2011. For energy-efficient improvements installed from January-December 2010, the tax credit equals 30% of the material costs.
Who: Homeowners
Limits: Improvements installed in 2011 can get a maximum credit of $500. Improvements installed in 2010 are capped at $1,500. If you have claimed more than $500 in energy-efficient tax credits since January 1, 2005 – you are not eligible to make a tax credit claim in 2011.
Claim: For Tax Purposes, save your receipt and the Manufacturer’s Certification Statement. Use IRS Tax Form 5695 (version 2009).
Note: For insulation to qualify, its primary purpose must be to insulate. It must be expected to last five years OR have a two-year warranty, installation costs are not included.

Builder Tax Credit for Energy-Efficient Homes

What: $2,000 tax credit for new, energy-efficient homes that achieve 50% energy savings over the 2004 International Energy Conservation Code (IECC) and supplements. At least 1/5 of the savings must come from building envelope improvements.
Who: Home builders
Limit: This credit is retroactive to January 1, 2010 and covers homes built through December 31, 2011.
Claim: Eligible contractors should fill out IRS Form 8908.

TAX Credit FAQs

  • What is a tax credit? You don’t receive an income tax credit when you buy the product, like an instant rebate. You claim the credit on your federal income tax form at the end of the year. The credit then increases the tax refund you receive or decreases the amount you have to pay.
  • How many tax credits are there? There is one tax credit and a tax deduction.  There is a tax credit for homeowners who make energy efficient upgrades to their existing homes, and a tax deduction for commercial property owners who reduce energy consumption of their buildings.
  • Do I have to turn in new paperwork to the IRS to qualify for the tax credit? Yes, IRS Form 8908. You must also keep your receipts and your documentation that your home meets the standards.
  • Tax credits vs. tax deductions: In general, a tax credit is more valuable than a similar tax deduction. A tax credit reduces the tax you pay, dollar-for-dollar. Tax deductions – such as those for home mortgages and charitable giving – lower your taxable income. If you are in the highest 35-percent tax bracket, the income tax you pay is reduced by 35 percent of the value of a tax deduction. But a tax credit reduces your federal income tax by 100 percent of the amount of the credit.
  • What energy-efficient home improvements are eligible for existing homes? The overall $500 cap can be reached in several ways with the purchase and installation of energy-efficient products:
  • Exterior windows: 10 percent of the total cost, up to $200. Includes skylights and storm windows.
  • Insulation, exterior doors, or pigmented metal roofs: 10 percent of the cost of the product (but not the installation), up to $500. Includes seals to limit air infiltration, such as caulk, weather stripping, and foam sealants, as well as storm doors.
  • Central air conditioner, heat pump, or water heater: up to $300 towards the full purchase price, including installation costs.
  • Furnace or boiler: up to $150 towards the full purchase price, and/or $50 for an efficient air-circulating fan in a furnace, including installation cost.

Commercial Tax Deduction

What: Tax deduction of up to $1.80 per square foot for new or existing commercial buildings that save at least 50% of the heating and cooling energy of a building that meets ASHRAE Standard 90.1-2001
Who: Owners or designers of new or existing commercial buildings
Limit: Available for systems “placed in service” from January 1, 2006 through December 31, 2013
Note: Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems; the building envelope, lighting, heating and cooling systems.

arrowCommerical Tax Deduction Requirements (DOE)


Resources

arrowDownloadable Tax Credit Reference Sheet (PDF)

News Release: Recent Study Helps Quanity Benefits of Energy-Efficient Retrofits (PDF)

Incentives and programs for energy-efficiency vary widely from state to state.
Visit the following database to get the most up-to-date information:
arrowDatabase of State Incentives for Renewables & Efficiency

For an overview of Federal tax credits visit EnergyStar.gov:
arrowEnergyStar.gov.

If you have further questions regarding tax credits, please consult a certified public accountant.

BioBased Insulation® is a spray polyurethane foam insulation. During application, precautions should be taken by applicators, helpers and building occupants to protect them from fumes, mists and spills. For more information view our product MSDS.