Unlike a tax deduction, which reduces the amount of income subject to tax, a tax credit directly reduces the amount of federal income tax you pay.
(NAPSI)-Uncle Sam is ready to give you credit for the steps you take to reduce energy consumption in your home. The Energy Policy Act of 2005 provides valuable tax credits-as much as $300 to consumers who purchase qualified high-efficiency heating, cooling and water-heating equipment.
These new tax credits took effect in January 2006. Unlike a tax deduction, which reduces the amount of income subject to tax, a tax credit directly reduces the amount of federal income tax you pay or increases the tax refund you receive.
The new energy legislation defines the type of equipment and the amount of the credit in this way:
â€¢ High-efficiency gas, oil and propane furnaces and boilers: $150
â€¢ High-efficiency central air-conditioning units, including air-source and ground-source heat pumps: $300
â€¢ High-efficiency fans for heating and cooling systems: $50
â€¢ High-efficiency water heaters, including heat pump water heaters: $300.
Manufacturers and retailers should be able to tell homeowners whether a specific product qualifies for a tax credit. Qualifying efficiencies identified in the bill include:
â€¢ Furnaces and boilers: Annual Fuel Utilization Efficiency (AFUE) of 95 or higher
â€¢ Air-source heat pumps: Heating Seasonal Performance Factor (HSPF) of 9 or greater, Seasonal Energy Efficiency Ratio (SEER) of 15 or higher and Energy Efficiency Ratio (EER) of 13 or higher
â€¢ Central air-conditioning units: SEER of 15 and EER of 12.5.
In addition to providing tax credits, these high-efficiency products also offer homeowners lower home energy bills, increased indoor comfort and reduced air pollution. That’s because this new equipment employs technologies that make new heating systems much more energy efficient than the furnace or heat pump currently warming your home.
The maximum credit for all taxable years is $500 and is applicable to other home energy-efficiency improvements, including the installation of new windows, insulation, doors and roofs. To qualify for the tax credits, homeowners will need to verify the efficiency of the equipment and the date when it was placed in service. The equipment must be installed between January 1, 2006, and December 31, 2007.
ColemanÂ® heating, ventilation and air-conditioning products manufactured by Johnson Controls meet the efficiency specifications set forth in the new energy bill. To learn more about the energy-efficient Echelonâ„¢ Series of air conditioners, heat pumps and furnaces, visit http://www.colemanac.com.
Â For more infomation about potential energy tax credit, visit
- EnergyStar.gov – Federal Tax Credits for Energy Efficiency