2011 Residential Federal Energy Tax Credit

If you're not aware, some of the Federal tax incentives that were in place for home energy improvements have expired as of Dec. 31, 2010! If you installed or upgraded your energy systems in 2010, you're good to go for tax season this year. The changes that took place will affect installations in 2011 (and beyond) for those filing taxes in 2012. The good news is that some energy efficiency and clean energy systems still get the 30% tax credit (see below for more details)!

From the EnergyStar section on the Home Energy Improvement tax credits:

On December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This law extends the tax credits for energy efficiency into 2011, BUT at lower levels. The levels revert back to those in effect in 2006 and 2007, which were 10% of the cost of the improvement, up to $500, with a $200 max for windows, and several other set maximums.


  • 10% up to $500 for insulation, roofs, and doors.
  • Windows capped at $200, but qualification now ENERGY STAR
  • Furnace and boilers capped at $150, and all furnaces and boilers must meet 95 AFUE
  • $50 for advanced main air circulating fan
  • $300 for air conditioners, air source heat pumps, water heaters, and biomass stoves
  • $500 lifetime limit. If you got over $500 in these tax credits from 2006-2010, you are not eligible for anything more.

Regarding the $500 lifetime limit, Green Homes America has the following to say in their 2011 tax credit summary:

The $500 cap will apply to anyone who received the credit from Jan. 1, 2005 to present. Thus, if you’ve claimed a cumulative credit of $500 or more since Jan. 1, 2005, you won’t be eligible for the 2011 extension. If you’ve claimed less than $500 cumulatively, you are eligible for the difference with qualifying measures.

What EnergyStar doesn't mention is the Electric Car Charging station tax credit.  From

After broke the story earlier this week that the lucrative federal tax credit for installing electric car charging stations had been snuck into the controversial Bush-era tax cut extension bill at the last minute, it was only a matter of playing the waiting game to see if it made it all the way through to passage. As of late last night, the bill has passed both the House and Senate with the charging station credits intact and reportedly will be signed into law by President Obama this afternoon. The language in the bill extends the tax credit through December 31, 2011.

It's a bit of a bittersweet victory for plug-in car advocates however, as the tax credit will be extended at pre-stimulus levels—meaning a credit for 30% of the purchase and installation costs of the charging equipment, up to $1,000 for individuals and $30,000 for businesses. While this is great news, it's much lower than the 50% (up to $2,000 for individuals and $50,000 for businesses) that it had been for all of 2010.

But, this $500 limit is only for the Home Energy Improvement Tax Credit. There is still a 30% Federal Tax credit for the following clean energy systems with no limit (Expiring on Dec. 31 2016):

It looks to me that the energy generating system industry was better at lobbying for tax incentives than the energy efficiency/conservation industry! Save your family some money in the long run and take advantage of the gift from Uncle Sam!

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Good point Eric. I think it is important to remember that government funds are a pooling of our own resources and they don't generate their own source of revenue. I've used several incentives including solar thermal, energy star and will be using an Electric Vehicle incentive as soon as my electric car conversion is complete. I have plans to use the insulation tax incentive this year as well. It really is a great way to have a little control over where your tax obligations are deployed.
Probably stating the obvious, but don't forget to also look up other incentives from states & utilities, at when you do that work!
It's a tax _credit_, i.e. you get back taxes you would have paid. So I like to think of it not so much as a gift, but as a rare chance to direct your hard-earned tax money towards a project of your choosing, rather than to oil subsidies, etc. :)

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