A tax credit is subtracted from the amount of tax that you owe. Credits are claimed when you file taxes for the previous year, so if you made a purchase in 2014, you would be claiming your tax credit now when you file your taxes.
Previously, many of the energy efficiency tax credits expired at the end of 2013. However, the Tax Increase Prevention Act of 2014 extended many of the credits through December 31, 2014. So if you made any of the following purchases in 2014, you are eligible for a tax credit:
Biomass stoves Heating, venting, air conditioning, including: Advanced main air circulating fan Air-source heat pump Central air conditioning Gas, propane, or oil hot water boiler Natural gas, propane, or oil furnace Insulation Roofs (metal and asphalt) Water heaters (non-solar) Windows and doors
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for the exact requirements for each of the products listed above.
If you installed any of the following in 2014, or if you’re planning to install them in the future, these items are available for a tax credit through 2016:
Geothermal heat pumps Small residential wind turbines Solar energy systems Fuel cells (residential fuel cell and microturbine systems)
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for requirements on each of these. If you are planning to install a small wind energy system this year, note that there is new certification guidance for systems purchased or operational after January 26, 2015. Read more about the new small wind certification requirement.
Rebates work differently than tax credits by getting cash back into your hands more quickly after you make a purchase. There are no federal rebates for energy efficient purchases at this time. However, many state governments, local governments, and utilities do offer rebates for energy efficient purchases. Some manufacturers also sponsor special offers that can make efficient products more affordable.
Rebates and special offers can generally be combined with other incentives like tax credits, and many are only available for a limited time, so do your research before making a purchase. Search for tax credits and rebates on energy.gov and find incentives from ENERGY STAR partners
Energy Efficient Financing
In addition to incentives like tax credits and rebates, there are financing options available if you are interested in making energy efficient home improvements. The new PowerSaver Loans program offers loan options for:
Smaller efficiency projects Larger efficiency projects that may require a second mortgage, such as solar installation Energy rehab loans for a first mortgage, either for a new home purchase or a refinance of an existing mortgage
Note: As of June 2015, PowerSaver loans are no longer available. See Energy Saver for other financing options.
State, Local, and Utility Incentives
Finally, be sure to exhaust all options when searching for incentives for your purchase. In addition to the rebates described above, your state government, local government, or utility may offer incentives. Utilities sometimes offer free or discounted energy audits, which can help you identify the improvements that would have the greatest impact on your energy bills. Check your utility’s website, and also visit the Database of State Incentives for Renewables and Efficiency
to see what is available locally.
Above all, don’t be intimidated by the different options available. A little research can yield some big savings, both when making a purchase and on your energy bill for years to come.