General Guidelines

Here are some general guidelines for the tax credits and incentives in the American Recovery and Reinvestment Act of 2009. Note that there may be differences in credits for the various products. There may also be differences in the credits if the improvements are being made in existing homes, new homes, or commercial properties.

Improvements to an Existing Home

• For tankless water heaters, boilers and biomass stoves, the equipment must be “placed in service” between January 1, 2009 and December 31, 2010. The IRS defines "placed in service" as when the product is ready and available for use.
• For geothermal heat pumps and solar water heaters, the equipment must be “placed in service” between January 1, 2009 and December 31, 2016. The same IRS definition of "placed in service" applies.
• The equipment must be for the taxpayer’s principal residence.
• Tax credits for geothermal heat pumps and solar water heaters are not subject to a cap and calculated at 30% of system cost including installation costs. The credit for these improvements is available from 2009 until 2016.
• Tax credits for tankless water heaters, boilers, and biomass stoves are calculated at 30% of cost, which includes purchase price and installation costs. There is a cap of $1,500 for these tax credits, which is the maximum combined total amount for 2009 and 2010 that can be claimed for all the home improvements subject to a cap.
• You should save your receipts for record keeping. In addition, Manufacturer's Certifications are required for many of these products and we have links on this website to the required paperwork where necessary. You must keep a copy of these certification statements, but you do not need to submit them with your tax return.
• IRS Form 5695 must accompany your tax return to claim credits. Currently the IRS only has the form for 2008 taxes available.

• Home builders are eligible for a $2,000 tax credit for a new energy efficient home that achieves 50% energy savings for heating and cooling over the 2004 International Energy Conservation Code (IECC) and supplements. At least 1/5 of the energy savings must come from building envelope improvements. This credit also applies to contractors of manufactured homes conforming to Federal Manufactured Home Construction and Safety Standards.
• There is also a $1,000 tax credit to the producer of a new manufactured home achieving 30% energy savings for heating and cooling over the 2004 IECC and supplements (at least 1/3 of the savings must come from building envelope improvements), or a manufactured home meeting the requirements established by EPA under the ENERGY STAR program.
• These tax credits apply to new homes located in the United States whose construction is substantially completed after August 8, 2005 and that are acquired from the eligible contractor for use as a residence from January 1, 2006 through December 31, 2009.
• IRS Form 8908 must accompany your tax return to claim credits. Currently only the form for 2008 taxes is available.

Commercial Buildings

• Tax credits are available for Solar Panels and Solar Water Heaters at 30% of the cost, with no upper limit, for systems installed from Jan. 1, 2008 through Dec., 31, 2016.
• Tax credits are available for Geothermal Heat Pumps at 10% of the cost, with no upper limit, for systems installed from Jan. 1, 2008 through Dec., 31, 2016.
• A tax deduction of up to $1.80 per square foot is available to owners or designers of 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.
• Partial deductions of up to $.60 per square foot can be taken for measures affecting the building's heating and cooling systems.
• These tax deductions are available for systems “placed in service” from January 1, 2006 through December 31, 2013. The IRS defines "placed in service" as when the product is ready and available for use.