Taxpayers may be able to claim a tax credit for home improvements which make use of renewable sources of energy, such as:
- Solar panels
- Solar powered hot water heaters
- Wind turbines
- Geothermal heat-pumps
- Fuel cells
The energy efficiency tax credit is a "non-refundable" credit which means the credit will lower your tax liability, but not less than $0.
Example: Let’s say, you owe $5000 in federal taxes this year and you claim a $2000 tax credit. The tax credit would lower your tax liability leaving a balance of $3000 due.
The following building improvements expired as of 12/31/2017. The maximum allowed credit for all improvements is $500.
- Insulation materials and systems designed to reduce a home's heat loss or gain
- Exterior doors and windows (including skylights) --- no more than $200 in total credits can be claimed for windows in years 2006 - 2016
- Pigmented metal roofs designed to reduce heat gain, and asphalt roofs with appropriate cooling granules, which are Energy Star certified.
The following heating, cooling, and water-heating improvements expired as of 12/31/2017. The credit for these purchases is equal to the cost of the equipment up to the amount of the caps as listed below:
- Advanced main air circulating fan: $50
- Natural gas, propane, or oil furnace or hot water boiler: $150
- Electric heat pump water heater with an energy factor of at least 2.0: $300
- Central air conditioner which achieves the highest efficiency: $300
- Natural gas, propane, or oil water heater which has either an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent: $300
- Biomass stoves that use "plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers". Systems must have a thermal efficiency rating of at least 75 percent to qualify: $300
The Non-Business Energy Property Credit expired 12/31/2017. Congress has not determined if the credit will be renewed for 2018.