Articles
The Energy Policy Act of 2005
What the Energy Bill Means to You
Source: http://www.energy.gov/taxbreaks.htm
Please Note:
This is a condensed version of the article referenced (above) concentrating on heating and cooling equipment.
The Energy Policy Act of 2005 (EPACT), signed by President Bush on August 8, 2005, offers consumers and businesses federal tax credits beginning in January 2006 for purchasing fuel-efficient hybrid-electric vehicles and energy-efficient appliances and products. Most of these tax credits remain in effect through 2007.
Buying and driving a fuel-efficient vehicle and purchasing and installing energy-efficient appliances and products provide many benefits such as better gas mileage – meaning lower gasoline costs, fewer emissions, lower energy bills, increased indoor comfort, and reduced air pollution
Some consumers will also be eligible for utility or state rebates, as well as state tax incentives for energy-efficient homes, vehicles and equipment. Each state’s energy office web site may have more information on specific state tax information.
About Tax Credits
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Beginning in tax year 2006, consumers will be able to itemize purchases on their federal income tax form, which will lower the total amount of tax they owe the government.
Home Energy Efficiency Improvement Tax Credits
Consumers who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in the home can receive a tax credit of up to $500 beginning in January 2006.
Improvements must be installed in or on the taxpayer’s principal residence in the United States. Home improvement tax credits apply for improvements made between January 1, 2006 and December 31, 2007.
Table of anticipated tax savings and energy savings
For energy-efficient home improvements (as of November 2005)
| Product Type | Tax Credit Specification | Tax Credit |
Central AC |
EER 12.5/SEER 15 split Systems EER 12/SEER 14 package systems |
$300 |
Air source heat pumps |
HSPF 9 EER 13 SEER 15 |
$300 |
Geothermal heat pump |
EER 14.1 COP 3.3 closed loop EER 16.2 COP 3.6 open loop EER 15 COP 3.5 direct expansion |
$300 |
Gas, oil, propane water heater |
Energy Factor 0.80 |
$300 |
Electric heat pump water heater |
Energy Factor 2.0 |
$300 |
Gas, oil, propane furnace or hot water boiler |
AFUE 95 |
$150 |
Advanced main air circulating fan1 |
No more than 2% of furnace total energy use |
$50 |
1. aka: Variable speed blower - also available in some 80 AFUE models.