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The Energy Policy Act of 2005 (EPAct), enacted on August 8, 2005, offers consumers and businesses federal tax credits for making energy-conscious purchases in 2007, and has been extended through 2008.

Home Owners

Homeowners can qualify for tax incentives during the next two years in the following areas:

  • Home improvements, such as:
    • Construction of an EnergyStar-certified home
    • Window, skylight or exterior door replacement (10% of cost up to a cap of $200)
    • Added insulation to walls or ceilings (10% of cost up to a cap of $500)
    • Purchasing highly efficient heating, cooling, and water heating equipment ($50-$300)
  • Purchase or lease of a high-efficiency passenger vehicle ($250-$3,000)
  • Installation of solar water heating systems or photovoltaics (30% of cost up to a cap of $2,000)
  • Installation of fuel cells (30% of cost up to $500/500 watts capacity)

And additionally there are state tax incentives.

Business Owners

Business owners can qualify for incentives in the following areas:

  • Buildings:
    • New or renovated buildings that save 50% or more on annual energy costs for heating, cooling and lighting compared to national standards (deductions of up to $1.80/sq ft)
    • Prorated deductions for improvements on lighting, HVAC or envelope systems (up to $0.60/sq ft for any one system).
  • Purchase or lease of a high-efficiency passenger or heavy-duty vehicle (based on weight class, fuel economy, and cost).
  • Solar equipment, including solar-hybrid lighting systems (30% of cost).
  • Use of distributed generation technologies: fuel cells and microturbine systems (30% of cost up to $500/500 watts capacity for fuel cells, microturbines qualify for a credit of 10% of cost up to $200/kilowatt capacity).

Home Builders

  • For qualifying models, home builders can be eligible for credits up to $2,000 per home sold, and manufactured home producers can qualify for up to $1,000 per home sold. Contact us for details.

Inadequate insulation is one of the main reasons why the average American home is losing between 10 and 50% of its energy each year.

The IRS Guidance references the insulation levels of the 2001 and 2004 International Energy Conservation Code (IECC). These model-building codes are fairly complex sets of guidelines that are designed to tell builders how much insulation to put in a home based on a number of factors. For simplicity, the North American Insulation Manufacturers Association ("NAIMA") has taken these levels of insulation and combined them with recommended levels of insulation from the US Department of Energy. This map is the result, giving state-by-state R-value recommendations. These levels should meet the criteria for the Federal tax credit. Note, only the cost of the insulation material counts towards the credit.