The U.S. Environmental Protection Agency (EPA) launched the Energy Star program in 1992 to protect the environment through energy efficient products and procedures. In order to receive an Energy Star rating, products falling under 50 home and office categories must meet strict energy conservation guidelines set by the U.S. Department of Energy, which partnered with the EPA on Energy Star in 1996.
Energy Star sponsors special offers such as tax exemptions, tax credits, or rebates to further encourage consumers to buy energy efficient products. These rebates can be found on Energy Star’s special offer/rebate finder.
Improving energy efficiency in your home can qualify you for federal tax credits as well. While a deduction reduces the amount of income subject to tax, a tax credit will directly reduce the tax itself. Keep in mind that although all Energy Star products will pay you back with lower utility bills, not all of them qualify for a tax credit. Products qualifying for a tax credit feature the highest efficiency levels and are also typically the most expensive. These products include:
Separate specifications apply to storm windows and doors. In order to collect the tax credit, you will need to save your receipts and either the Energy Star label or manufacturer’s certificate. The certificate, which confirms that the product is qualified for the credit, is often printed on the manufacturer’s website.
In addition, select models of other Energy Star appliances, including insulation products, HVAC systems, heat pumps, furnaces, hot water boilers, fans, water heaters, and solar products qualify for a federal tax credit. Check the links provided on the Energy Policy Act of 2005 – Summary of Tax Credits for Homeowners to find out which products qualify.
Home improvements to your primary residence can earn a maximum of $500 in credit during the tax credit’s two year period of January 1, 2006 through December 31, 2007. Solar energy systems and fuel cells, however, are not limited to the $500 cap and can qualify for a credit of up to 30% of the cost of the product.
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