Tax Credit Definitions

Information updated 2/16/2023

Please note, not all ENERGY STAR certified products qualify for a tax credit.

ENERGY STAR certifies energy-efficient products in over 75 categories which meet strict energy efficiency specifications set by the U.S. EPA to save you energy and money and help protect the environment.

AFUE (Annual Fuel Utilization Efficiency)
is a rating that denotes the efficiency of gas heating equipment. It is the amount of heating your equipment delivers for every dollar spent on fuel. A higher rating indicates more efficient equipment.

COP (Coefficient Of Performance)
of a heat pump is the ratio of the change in heat at the "output" (the heat reservoir of interest) to the supplied work.

EER2 (Energy Efficiency Ratio 2)
is the ratio of the average rate of space cooling delivered to the average rate of electrical energy consumed by the air conditioner or heat pump. This ratio is expressed in Btu per Wh (Btu/Wh). 

Energy Factor
is the measure of overall efficiency for a variety of appliances. For water heaters, the energy factor is based on three factors: 1) the recovery efficiency, or how efficiently the heat from the energy source is transferred to the water; 2) stand-by losses, or the percentage of heat lost per hour from the stored water compared to the content of the water: and 3) cycling losses. For dishwashers, the energy factor is defined as the number of cycles per kWh of input power. For clothes washers, the energy factor is defined as the cubic foot capacity per kWh of input power per cycle. For clothes dryers, the energy factor is defined as the number of pounds of clothes dried per kWh of power consumed.

HSPF2 (Heating Seasonal Performance Factor 2)
the total space heating required in region IV during the space heating season (Iowa, Minnesota, Missouri, North Dakota and South Dakota), expressed in Btu, divided by the total electrical energy consumed by the heat pump system during the same season, expressed in watt-hours.

IECC 2009
Standards published by the International Code Council, the IECC sets forth compliance methods for energy-efficient construction of both residential and nonresidential construction.

Manufacturer’s Certification Statement
is a signed statement from the manufacturer certifying that the product or component qualifies for the tax credit. The IRS encourages manufacturers to provide these Certifications on their website to facilitate identification of qualified products. Taxpayers must keep a copy of the certification statement for their records, but do not have to submit a copy with their tax return.

SEER2 (Seasonal Energy Efficiency Ratio 2)
the total heat removed from the conditioned space during the annual cooling season, expressed in Btu, divided by the total electrical energy consumed by the air conditioner or heat pump during the same season, expressed in watt-hours. The higher the SEER rating, the more energy efficient the equipment is. A higher SEER can result in lower energy costs.

SHGC (Solar Heat Gain Coefficient)
measures how well a window blocks heat from sunlight. The lower the SHGC, the lower the heat gain through a window. SHGC ranges from 0 to 1.

Split System & Package System
A central air conditioner (or heat pump) is either a split-system unit or a packaged unit. The majority of consumers have split systems in their homes.

A split system is any air conditioner or heat pump that has at least two separate assemblies that are connected with refrigerant piping when installed. One of these assemblies includes an indoor coil that exchanges heat with the indoor air to provide heating or cooling, while one of the others includes an outdoor coil that exchanges heat with the outdoor air. Split systems may be either blower coil systems or coil-only systems.

If your home already has a furnace but no air conditioner, a split-system is the most economical central air conditioner to install.

A single package unit is an air source heat pump or central air conditioner that has all major assemblies (evaporator coil, condenser, and compressor) enclosed in a single cabinet, usually placed on a roof or a concrete slab next to the house's foundation. This type of air conditioner also is used in small commercial buildings. Air supply and return ducts come from indoors through the home's exterior wall or roof to connect with the packaged air conditioner, which is usually located outdoors. Packaged air conditioners often include electric heating coils or a natural gas furnace. This combination of air conditioner and central heater eliminates the need for a separate furnace indoors.

Thermal Efficiency
For energy-conversion heating devices their peak steady-state "thermal efficiency" is often stated, e.g., 'this furnace is 90% efficient', but a more detailed measure of seasonal energy effectiveness is the Annual Fuel Utilization Efficiency (AFUE).

U-Factor
measures how well a window, door, or skylight prevents heat from escaping. It is similar to the R value for insulation. The lower the number, the more efficient the window. Ratings usually range from 0.20 to 1.20.

Uniform Energy Factor (UEF)
The newest measure of water heater overall efficiency. The higher the UEF value is, the more efficient the water heater. UEF is determined by the Department of Energy’s test method outlined in 10 CFR Part 430, Subpart B, Appendix E.