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What Is an Energy Tax Credit?

Energy tax credits can help you reduce your property's energy bills, improve its environmental footprint, and lower your tax burden.


[Updated: Mar 02, 2021 ] Jun 26, 2020 by Aly J. Yale

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Improvement Tax credit Other details
Geothermal heat pumps 30% of costs if installed by Dec. 31, 2019
26% of costs if installed by Dec. 31, 2020
22% of costs if installed by Dec. 31, 2021
Must meet Energy Star requirements
Includes installation costs
Small wind turbines 30% of costs if installed by Dec. 31, 2019
26% of costs if installed by Dec. 31, 2020
22% of costs if installed by Dec. 31, 2021
Must generate 100 kw of electricity or less
Includes installation costs
Solar water heaters 30% of costs if installed by Dec. 31, 2019
26% of costs if installed by Dec. 31, 2020
22% of costs if installed by Dec. 31, 2021
At least half the energy generated must come from the sun
Cannot be used for pools or hot tubs
Includes installation costs
Solar energy systems 30% of costs if installed by Dec. 31, 2019
26% of costs if installed by Dec. 31, 2020
22% of costs if installed by Dec. 31, 2021
Must meet fire and electrical code
Includes installation costs
Fuel cells 30% of costs if installed by Dec. 31, 2019
26% of costs if installed by Dec. 31, 2020
22% of costs if installed by Dec. 31, 2021
Up to $500 per half-kw of power capacity
Includes installation costs
Air source heat pumps $300 Must be an Energy Star-certified system
Central air conditioning $300 Must be an Energy Star-certified system
Hot water boiler (gas, propane, or oil) $150 Must be an Energy Star-certified system
Furnaces and fans (gas, propane, or oil) $150 Must be an Energy Star-certified system
Water heaters (gas, propane, or oil) $300 Must be an Energy Star-certified system
Must have a thermal efficiency of at least 90%
Electric pump water heater $300 Must be an Energy Star-certified system
Advanced main air circulating fan $50 Must be an Energy Star-certified system
Must use no more than 2% of the furnace’s total energy
Biomass stoves $300 Must be an Energy Star-certified system
Must have a thermal efficiency rating of at least 75%
Insulation 10% of cost, up to $500 Does not include installation
Roofing (metal or asphalt) 10% of cost, up to $500 Must be an Energy Star-certified system Does not include installation
Windows, doors, and skylights 10% of cost, up to $500 (up to $200 for windows) Must be an Energy Star-certified system
Does not include installation

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