Federal income tax credits for energy efficient equipment are back!  Congress recently renewed them through the end of 2016, making them retroactive to also cover eligible products installed in 2015.  Covered products include central air conditioners, heat pumps, furnaces and furnace fans, boilers, water heaters, windows, insulation and roofs.  The amount of the credit ranges from $50 - $300, depending on the product, with an overall limit of $500.  But only products installed in your primary residence count.

If you plan to take advantage of one of these tax credits, be sure you choose a product model that has earned the ENERGY STAR, which means it is independently certified to save energy, save money and help protect the climate.  It may also be eligible for a rebate from your local utility, on top of the tax credit.  In fact, you can save even more – up to 30% of your home energy bill – by outfitting your whole house with ENERGY STAR products.

With the renewal of these tax credits, now is a great time to replace old, inefficient equipment.  Take water heaters, for example.  If you have a water heater that is more than 10 years old, be proactive and replace it before it floods your basement.  ENERGY STAR certified heat pump water heaters use less than half the energy of a standard electric storage water heater.  This translates to a savings of $330 per year for a four-person household and $3,400 over the life of the water heater.  All on top of the $300 tax credit!

For more information about energy efficient tax credits visit www.energystar.gov/taxcredits.

About the Author: Ann Bailey is the Director of the U.S. Environmental Protection Agency’s ENERGY STAR Labeling Branch.