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Federal Tax Credit for Energy Efficiency

Federal Tax Credit for Energy Efficiency

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Go Green and Save Some Cash on the Premium! Do You Qualify?

Energy Efficiency might qualify for a Tax Credit! If you are looking to buy or have recently bought a Central Air Conditioner or Heat Pump the Energy Star website states that to qualify:

  • This type of purchase must be installed and “placed in service” between January 1, 2015 and October 31, 2017.
  • Only the taxpayer’s principal and already existing residence qualifies. (No new construction!)
  • The claimable credit is 30% for the total cost including installation.
  • A maximum total amount that can be claimed for all products “placed in service” between 2016 and 2017 is $1,500.
  • Any Improvements made in 2016 can be claimed on your 2016 tax return using the IRS Tax Form 5695 (2009 version) which should be available in late 2016 or early 2017 and filed by April 15, 2017.
  • Manufacturer Certification Statement is required to qualify. This is the trickiest requirement to fulfill so be sure to save this along with your receipts when making any purchase!

 

Federal Tax Credit for Energy Efficiency
SPLIT SYSTEM PACKAGE SYSTEM
CENTRAL AIR CONDITIONERS SEER  

>=14

 

 

>=16

 

EER  

>=13

 

 

>=12

 

HEAT PUMPS SEER  

>= 15

 

 

>=14

 

EER  

>=12.5

 

 

>=12

 

HSPF  

>=8.5

 

 

>=8

 

*All Criteria for either Air Conditioners or Heat Pumps must be met to qualify for the credit

Note that not all Energy Star Certified products qualify. For energy efficient air conditioners to reach the thes green levels stipulated by the Federal Tax Credit you will also likely have to replace:

  • Your furnace if you use its blower as part of an air handler unit and this blower does not utilize a more advanced and efficient main circulating fan.
  • Your pre–existing air handler if you already own an aging heat pump.

From a practical standpoint, if you were planning on replacing just the external unit, this might be an unexpected expense if you were planning on qualifying for the tax credit. Interestingly enough, while this is the trickiest criteria to fulfill, taxpayers are not required to submit a copy of this certification along with their tax return for now but should still keep a copy of these for their own records anyway.

It is possible to qualify with an newer furnace or air handler already installed, but buyers must consider that manufacturers in general are currently only testing and certifying their own equipment. As a result, the manufacturer may require both external condensing and compressing units as well as the internal evaporator or blower units to be of their own brand since they must be tested together as a single system.

On the brighter side, you may also qualify for a tax credit at the state level as well. Check out the Database of State Incentives for Renewables and Efficiency (DSIRE) for a wealth of state and local information on active incentive programs that could save you a few bucks.

Finally, the Air Conditioning, Heating and Refrigeration Institute (AHRI) independently tests and certifies the accuracy of manufacturer’s performance claims. You can pre–verify if the equipment you plan to purchase is eligible for the tax credit by checking on the CEE-AHRI Online Database. To search, simply select “Yes” on the “Eligible for Tax Credit” parameter in the first column of the search screen filter and specify as much remaining information as possible. As this list is not provided by Energy Star itself and therefore is by no means definitive, also check the Non-AHRI CAC/ASHP Product list.

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