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Home » Eco-Friendly Savings, Taxes

Energy Tax Credits Extended but Reduced in 2011

Last updated by on 10 Comments

Update: the latest energy tax credit details have now been released.

Energy Tax Credit Changes in 2011

There is a home Energy Tax Credit this year, it’s just not half what it used to be. Literally. The 2009 and 2010 Energy Tax Credits were very generous as they were part of the American Recovery & Reinvestment Act, and were created to help spur the economy through people making home upgrades to get the credits. These tax credits were actually extended as part of the Obama tax cut deal, but now that we’ve ‘recovered’, the generosity trails off a bit in 2011. Here are the details:

  • The 2011 Energy Tax Credit amount: drops to 10% of a project and $500 max. For comparison, last year’s credit capped out at 30% of a project up to a max of $1,500.
  • Energy Star window tax credit: up to $200 maximum.
  • Water heater tax credit (includes electric, natural gas, propane, or oil): up to $300 maximum.
  • Air conditioner tax credit: up to $300 maximum.
  • Insulation, doors, and roof credits: up to the $500 cap.
  • Furnace tax credit (includes natural gas, propane, oil, or hot water): $150 maximum. Efficiency must be 95% (up from 90% before the extension).

The big kicker: If you’ve already taken advantage of the Energy Tax Credit, whatever you claimed in the past counts against the $500 in 2011.

Before you buy anything, make sure your product qualifies for the credit and verify how much credit you will receive.

2011 energy tax credit

30% Energy Tax Credits Through 2016

While the energy tax credits for most common house projects have lost their luster a bit, those with big investment plans can still celebrate. There is still a 30% tax credit with no maximum limit for the following installations:

  • geothermal heat pumps
  • solar energy systems
  • small wind turbines
  • fuel cells ($500 max limit)

For more on these tax credits, check out the EnergyStar Energy Tax Credit site.

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10 Comments »
  • Brian says:

    Surprising. If there’s anything that the government should be incenting, it’s consumer investment in energy improvements. I’d like to know where the money saved by the government from this decrease is going in the budget. Hopefully not long-broken social programs. I guess we should count our blessings (the credit isn’t completely gone), but the credits of 2009 and 2010 should be permanent. There was a LOT of talk preceding the 2008 election about focusing on alternative energy and a cleaner/safer environment. Then, a couple years later, they snip the associated tax credit?

    • Wisey says:

      @Brian
      >the credits of 2009 and 2010 should be permanent. There was a >LOT of talk preceding the 2008 election about focusing on >alternative energy and a cleaner/safer environment. Then, a >couple years later, they snip the associated tax credit?

      According to the article, it seems that there is still a 30% tax credit with no limit for alternative energy systems. Only the credits for fossil fuel based systems have been reduced/removed.

  • Bob Fenton says:

    Are you sure about the extension of the tax credits for energy efficiency?

    Is there a chance that the credits will be increased back to the 30% level during the year?

    Can you point to another source for your info re: tax credit extension?

    Thanks for your post!

  • Ann says:

    We are upset because we knocked down a small cottage on a piece of property and built a new home that has all energy star appliances, radiant heat with a boiler that is 89% efficient, Anderson series 400 windows, a wood stove that is 80% efficient and we cannot collect the $1500.00 2010 tax credit.

    Instead of putting extra money into these items, we could have gotten away a little less expensive. I really feel that we should be able to take this.

    Be careful if you are new construction even if you are knocking down an existing structure and making it better.

  • JIM says:

    As a preparer of tax returns, it is difficult to have to explain to a client that they have spent a lot of money on energy efficient property and that they do not qualify for the credit especially when they are expecting to recover some of their cost with the credit. Many sales people will tell a client that the items being sold meet the requirements for the credit and that they can rely on the energy star symbol. This is deceiving and not true. The current credits require a letter from the manufacturer certifying that the items being sold meet the energy savings standards required for the credits. Also, the credits as indicated by one poster are limited to certain structures and applications. You should check the IRS web site or a trained tax preparer if you are in doubt before spending a lot of your hard earned money.

  • Tim says:

    Please explain The big kicker: If you’ve already taken advantage of the Energy Tax Credit, whatever you claimed in the past counts against the $500 in 2011.
    Does this mean that because i claimed $750.00 in 2009 & 750.00 in 2010 that now i cant use the $500.00 in 2011? If the 09/10 credit is gone how can this be used against me in 2011?
    How does something that no longer exists factor into something new?

  • Fred says:

    What if you purchased a new home? I used all the credits on my previous home and would like to upgrade again. Am I out of luck??

  • Ronda says:

    Pollution has led to environmental degradation causing widespread climatic changes and also resulting in
    various health hazards. Global warming is looming
    high over our heads and many companies are being forced to find ways to create a more efficient, natural way to provide electricity
    to billions upon billions of people and businesses.
    This study analyses the risk of investment for 3 scenarios; with the 2008 PTC, with a lower PTC of 1
    cent per k – Wh, and with out any government support.

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