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Tax Credits For Making Your Home Energy Efficient

As April 15 approaches, MoneyWatch is publishing daily tax tips. See the full list here, and please check back frequently for the latest advice from our experts.
The American Recovery and Reinvestment Act of 2009 (ARRA) provides tax credits and financial incentives for homeowners and businesses that become more energy efficient.

Here's a short list of the many energy tax credits and incentives that are available under ARRA (see below for additional links):

Residential Energy Property Tax Credit (Section 1121)

ARRA increased the energy tax credit for homeowners who make energy efficient improvements to their current residence. According to the IRS, the new law increases the tax credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum tax credit limit to $1,500 for improvements placed in service in 2009 and 2010.

What counts? You can get a tax credit for energy efficient improvements, such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.

Residential Energy Efficient Property Tax Credit (Section 1122)

Want to install a solar hot water heater, geothermal heat pump or a wind turbine in your home? This expanded nonrefundable tax credit provides for a tax credit equal to 30 percent of the cost of qualified property.

Other Energy Tax Credits

If you or your business qualify, ARRA provides for some generous tax credits (and one repeal), so be sure to check these out:
  • Plug-in Electric Drive Vehicle Tax Credit (Section 1141)
  • Plug-In Electric Vehicle Tax Credit (Section 1142)
  • Conversion Kits Tax Credit (Section 1143)
  • Treatment of Alternative Motor Vehicle Credit as a Personal Tax Credit Allowed Against AMT (Section 1144)
  • New Clean Renewable Energy Bonds (Section 1111)
  • Qualified Energy Conservation Bonds (Section 1112)
  • Extension of Renewable Energy Production Tax Credit (Section 1101)
  • Election of Investment Credit in Lieu of Production Tax Credit (Section 1102)
  • Repeal of Certain Limits on Business Tax Credits for Renewable Energy Property (Section 1103)
  • Coordination With Renewable Energy Grants (Section 1104)
  • Temporary Increase in Tax Credit for Alternative Fuel Vehicle Refueling Property (Section 1123)
Read more about the energy tax credits for businesses at

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Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and the upcoming Buy, Close, Move In!.
She blogs about money and real estate at
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