Tax Breaks for Energy Efficiency

Energy Efficiency ImprovementsFederal Energy Credits
If you weatherize your home or purchase alternative energy equipment, you may qualify for either of two expanded home energy tax credits which may be claimed on the federal return including the:
- Non-business energy property credit, and
- Residential energy efficient property credit.

Oregon Energy Credits
The Oregon Department of Energy also issues credit certificates for purchases of certain high-efficency appliances installed in your home.

Non-business Energy Property

This federal credit equals 10 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $500 for the combined 2007, 2008 and 2010 tax years.

  • You can get the maximum $500 credit by spending at least $5,000 on qualifying home improvements.
  • You must make the improvements to an existing principal residence; this tax credit is not available for new construction.

Home improvements that can qualify for the credit include purchase price and installation costs of:

  • Certain high-efficiency heating and air conditioning systems, High-efficiency water heaters
  • Stoves that burn biomass

The following types of costs (not including installation charges) may also be eligible for the credit:

  • Cost of energy-efficient windows and skylights
  • Energy-efficient doors
  • Qualifying insulation
  • Metal and asphalt roofs that are covered in coatings specifically designed to reduce heat gain.

Residential Energy Efficient Property

The Residential Energy Efficient Property tax credit is designed to spur investment in alternative energy equipment. The credit equals 30 percent of what you spend on qualifying property such as:

  • Solar electric systems
  • Solar hot water heaters
  • Geothermal heat pumps
  • Wind turbines
  • Fuel cell property

Qualifying property purchased for both new construction and existing homes is eligible for the credit. Generally, labor costs are included when calculating this credit. Generally, there is no cap on the amount of credit available except in the case of fuel cell property.

Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer's tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer's Web site or the product packaging. Normally, a homeowner can rely on this certification. The IRS cautions that the manufacturer's certification is different from the Department of Energy's Energy Star label, and not all Energy Star labeled products qualify for the tax credits.

Oregon Energy Credits

You can get a credit on your Oregon income taxes for making your home more energy-efficient and helping preserve Oregon's environment.

If you are an Oregon resident and do not have an Oregon income tax liability, you may choose to transfer your tax credit to an individual or business with an Oregon tax liability using the Pass-through Option.

Below is a list of the energy efficient products/technologies that are eligible for a tax credit. Click on the topic to be linked to the Oregon Department of Energy page that explains the credit, lists qualifying equipment, and provides application forms and instructions.