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2011 HVAC Tax Credits

2011 Federal Energy Efficiency Tax Credits


Please note: This information only applies to qualified products installed from January 1, 2011 to December 31, 2011.

On December 17, 2010, President Obama signed H.R. 4853 known as the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This Act is a compromised tax bill that made some significant changes to energy efficiency tax credits.


Tax Credit Details for Homeowners:

  • The efficiency levels required reflect the highest tier of the CEE High-efficiency Specification for Residential HVAC Systems as of January 1, 2009. Please note: Equipment listed in the chart below (except water heaters, which only needs to achieve one of the efficiency specifications) must meet all performance specifications for its category. For example, a tax-credit eligible split central air conditioner must have stated performance ratings of 13 EER and 16 SEER.
  • Improvements made in 2011 will be claimed on your 2011 taxes (filed by April 15, 2012)
  • The lifetime credit cap of $500 was reinstated. If you have claimed more than $500 in 25C tax credits since January 1, 2005, you are disqualified from any further credits.

 


1 A Manufacturer’s Certification 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.


How to Obtain the Tax Credit
Eligible contractors need to fill out IRS Form 8908 to get the tax credit. The IRS has provided the following guidance regarding the tax credits for constructing energy efficient new homes available under the Energy Policy Act of 2005:

IRS Notice 2006–27 provides guidance for the credit for building energy efficient homes other than manufactured homes.

IRS Notice 2006–28 provides guidance for the credit for building energy efficient manufactured homes.


Tax Deductions for Commercial Buildings
A tax deduction of up to $1.80 per square foot is available to owners or designers of new or existing commercial buildings that save at least 50% of the heating and cooling energy of a building that meets ASHRAE Standard 90.1-2001. Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems. These tax deductions are available for systems “placed in service” from January 1, 2006 through December 31, 2013.

Homeowners who install qualified renewable energy efficient improvements, such as geothermal heat pumps, wind and solar energy systems, and fuel cell technologies to existing or new homes qualify for a special tax credit equal to 30% of the installed costs with no dollar limits. This tax credit is available for the years 2009-2016. These credits do not count against the $1500 tax credit limits.

In order to claim the tax credits, taxpayers complete and file a Form 5695 with their regular tax return. They won't need to submit any more information, but they will be required to keep copies of the certificates provided by the manufacturers or contractors on file.

As a tax credit, this incentive applies against the taxpayers' liability, reducing the amount owed to the IRS on a dollar for dollar basis. If the taxpayer's liability is reduced to zero with some tax credits remaining, the homeowner may carry the balance over to reduce next year's taxes. Since everyone's tax situation is different, always check with your tax advisor on how these tax credits can help you reduce your liability and energy costs.


1 A Manufacturer’s Certification 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.


How to Obtain the Tax Credit
Eligible contractors need to fill out IRS Form 8908 to get the tax credit. The IRS has provided the following guidance regarding the tax credits for constructing energy efficient new homes available under the Energy Policy Act of 2005:

IRS Notice 2006–27 provides guidance for the credit for building energy efficient homes other than manufactured homes.

IRS Notice 2006–28 provides guidance for the credit for building energy efficient manufactured homes.


Tax Deductions for Commercial Buildings
A tax deduction of up to $1.80 per square foot is available to owners or designers of new or existing commercial buildings that save at least 50% of the heating and cooling energy of a building that meets ASHRAE Standard 90.1-2001. Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems. These tax deductions are available for systems “placed in service” from January 1, 2006 through December 31, 2013.

Homeowners who install qualified renewable energy efficient improvements, such as geothermal heat pumps, wind and solar energy systems, and fuel cell technologies to existing or new homes qualify for a special tax credit equal to 30% of the installed costs with no dollar limits. This tax credit is available for the years 2009-2016. These credits do not count against the $1500 tax credit limits.

In order to claim the tax credits, taxpayers complete and file a Form 5695 with their regular tax return. They won't need to submit any more information, but they will be required to keep copies of the certificates provided by the manufacturers or contractors on file.

As a tax credit, this incentive applies against the taxpayers' liability, reducing the amount owed to the IRS on a dollar for dollar basis. If the taxpayer's liability is reduced to zero with some tax credits remaining, the homeowner may carry the balance over to reduce next year's taxes. Since everyone's tax situation is different, always check with your tax advisor on how these tax credits can help you reduce your liability and energy costs.

Product Type

Tax Credit Specification

Tax Credit

Effective Date

Find Qualifying Equipment

Residential
Central A/C

Split:
EER>=13 
and SEER>=16

Packaged:
EER>=12
and SEER>=14

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to Air Conditioners and Air Conditioner Coils and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Air-Source Heat Pumps

Split:
HSPF >= 8.5
and 
EER >= 12.5
and
SEER >= 15

Packaged:
HSPF >=8
and
EER >= 12
and
SEER >= 14

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to Heat Pumps and Heat Pump Coils and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Geo-thermal Heat Pump

Closed Loop: 
EER >= 14.1 
COP >= 3.3

Open Loop:

EER>=16.2 
COP>=3.6 
Direct Expansion:
EER>=15
COP>=3.5

This one-time tax credit is for 30% of the total investment and is not limited to any lifetime home improvement cap.

The credits are available for systems 
"placed in service" from Jan. 1, 2006 through Dec. 31, 2016.

Go to either the Water-to-Air and Brine-to-Air Heat Pumps or Direct Geoexchange Heat Pumps directories and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Gas, Oil, Propane Furnace or Hot Water Boiler

Furnaces: 
Gas >= 95% AFUE

Oil >= 95% AFUE

Propane >= 95% AFUE

Boilers:
AFUE>=95

The tax credit is for $150

Jan.1, 2011 – Dec. 31, 2011

Go to:
Furnaces


Go to:
Boilers and select Yes for Tax Credit Eligible under Advanced Search

Advanced Main Air Circulating Fan

No more than 2% of furnace total energy use. Read this IRS Guidance if the fan qualifies, but the furnace does not. Read AHRI Safe Harbor Proposals to IRS.

The tax credit is for $50

Jan.1, 2011 – Dec. 31, 2011

Residential
Gas, Oil, Propane Water Heater

Energy 
Factor >= 0.82
or
Thermal 
Efficiency>=0.90

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to:
Residential Water Heaters /Commercial Water Heaters
and select Yes for Tax Credit Eligible under Advanced Search

Residential
Electric Heat Pump Water Heater

Energy Factor >= 2.0

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to:

Residential Water Heaters /Commercial Water Heaters and select Yes for Tax Credit Eligible under Advanced Search

Residential
Central A/C

Split:
EER>=13 
and SEER>=16

Packaged:
EER>=12
and SEER>=14

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to Air Conditioners and Air Conditioner Coils and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Air-Source Heat Pumps

Split:
HSPF >= 8.5
and 
EER >= 12.5
and
SEER >= 15

Packaged:
HSPF >=8
and
EER >= 12
and
SEER >= 14

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to Heat Pumps and Heat Pump Coils and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Geo-thermal Heat Pump

Closed Loop: 
EER >= 14.1 
COP >= 3.3

Open Loop:

EER>=16.2 
COP>=3.6 
Direct Expansion:
EER>=15
COP>=3.5

This one-time tax credit is for 30% of the total investment and is not limited to any lifetime home improvement cap.

The credits are available for systems 
"placed in service" from Jan. 1, 2006 through Dec. 31, 2016.

Go to either the Water-to-Air and Brine-to-Air Heat Pumps or Direct Geoexchange Heat Pumps directories and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Gas, Oil, Propane Furnace or Hot Water Boiler

Furnaces: 
Gas >= 95% AFUE

Oil >= 95% AFUE

Propane >= 95% AFUE

Boilers:
AFUE>=95

The tax credit is for $150

Jan.1, 2011 – Dec. 31, 2011

Go to:
Furnaces


Go to:
Boilers and select Yes for Tax Credit Eligible under Advanced Search

Advanced Main Air Circulating Fan

No more than 2% of furnace total energy use. Read this IRS Guidance if the fan qualifies, but the furnace does not. Read AHRI Safe Harbor Proposals to IRS.

The tax credit is for $50

Jan.1, 2011 – Dec. 31, 2011

Residential
Gas, Oil, Propane Water Heater

Energy 
Factor >= 0.82
or
Thermal 
Efficiency>=0.90

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to:
Residential Water Heaters /Commercial Water Heaters
and select Yes for Tax Credit Eligible under Advanced Search

Residential
Electric Heat Pump Water Heater

Energy Factor >= 2.0

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to:

Residential Water Heaters /Commercial Water Heaters and select Yes for Tax Credit Eligible under Advanced Search

 

Residential
Central A/C

Split:
EER>=13 
and SEER>=16

Packaged:
EER>=12
and SEER>=14

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to Air Conditioners and Air Conditioner Coils and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Air-Source Heat Pumps

Split:
HSPF >= 8.5
and 
EER >= 12.5
and
SEER >= 15

Packaged:
HSPF >=8
and
EER >= 12
and
SEER >= 14

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to Heat Pumps and Heat Pump Coils and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Geo-thermal Heat Pump

Closed Loop: 
EER >= 14.1 
COP >= 3.3

Open Loop:

EER>=16.2 
COP>=3.6 
Direct Expansion:
EER>=15
COP>=3.5

This one-time tax credit is for 30% of the total investment and is not limited to any lifetime home improvement cap.

The credits are available for systems 
"placed in service" from Jan. 1, 2006 through Dec. 31, 2016.

Go to either the Water-to-Air and Brine-to-Air Heat Pumps or Direct Geoexchange Heat Pumps directories and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Gas, Oil, Propane Furnace or Hot Water Boiler

Furnaces: 
Gas >= 95% AFUE

Oil >= 95% AFUE

Propane >= 95% AFUE

Boilers:
AFUE>=95

The tax credit is for $150

Jan.1, 2011 – Dec. 31, 2011

Go to:
Furnaces


Go to:
Boilers and select Yes for Tax Credit Eligible under Advanced Search

Advanced Main Air Circulating Fan

No more than 2% of furnace total energy use. Read this IRS Guidance if the fan qualifies, but the furnace does not. Read AHRI Safe Harbor Proposals to IRS.

The tax credit is for $50

Jan.1, 2011 – Dec. 31, 2011

Residential
Gas, Oil, Propane Water Heater

Energy 
Factor >= 0.82
or
Thermal 
Efficiency>=0.90

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to:
Residential Water Heaters /Commercial Water Heaters
and select Yes for Tax Credit Eligible under Advanced Search

Residential
Electric Heat Pump Water Heater

Energy Factor >= 2.0

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to:

Residential Water Heaters /Commercial Water Heaters and select Yes for Tax Credit Eligible under Advanced Search

 

Tax Credit

Residential
Central A/C

Split:
EER>=13 
and SEER>=16

Packaged:
EER>=12
and SEER>=14

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to Air Conditioners and Air Conditioner Coils and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Air-Source Heat Pumps

Split:
HSPF >= 8.5
and 
EER >= 12.5
and
SEER >= 15

Packaged:
HSPF >=8
and
EER >= 12
and
SEER >= 14

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to Heat Pumps and Heat Pump Coils and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Geo-thermal Heat Pump

Closed Loop: 
EER >= 14.1 
COP >= 3.3

Open Loop:

EER>=16.2 
COP>=3.6 
Direct Expansion:
EER>=15
COP>=3.5

This one-time tax credit is for 30% of the total investment and is not limited to any lifetime home improvement cap.

The credits are available for systems 
"placed in service" from Jan. 1, 2006 through Dec. 31, 2016.

Go to either the Water-to-Air and Brine-to-Air Heat Pumps or Direct Geoexchange Heat Pumps directories and select Yes for 'Eligible for Federal Tax Credit'.

Residential
Gas, Oil, Propane Furnace or Hot Water Boiler

Furnaces: 
Gas >= 95% AFUE

Oil >= 95% AFUE

Propane >= 95% AFUE

Boilers:
AFUE>=95

The tax credit is for $150

Jan.1, 2011 – Dec. 31, 2011

Go to:
Furnaces


Go to:
Boilers and select Yes for Tax Credit Eligible under Advanced Search

Advanced Main Air Circulating Fan

No more than 2% of furnace total energy use. Read this IRS Guidance if the fan qualifies, but the furnace does not. Read AHRI Safe Harbor Proposals to IRS.

The tax credit is for $50

Jan.1, 2011 – Dec. 31, 2011

Residential
Gas, Oil, Propane Water Heater

Energy 
Factor > ;= 0.82
or
Thermal 
Efficiency>=0.90

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to:
Residential Water Heaters /Commercial Water Heaters
and select Yes for Tax Credit Eligible under Advanced Search

Residential
Electric Heat Pump Water Heater

Energy Factor >= 2.0

The tax credit is for $300

Jan.1, 2011 – Dec. 31, 2011

Go to:

Residential Water Heaters /Commercial Water Heaters and select Yes for Tax Credit Eligible under Advanced Search

 
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