What You Need to Know About Tax Credit for Energy Efficient Windows

Upgrading your old windows will save you money in the long run by reducing your energy consumption. Homeowners wishing to cut their energy bills by "going green" can also get a little tax break from Uncle Sam. The American Recovery and Reinvestment Tax Act of 2009 was signed into law by President Obama on February 17, 2009. This new law extends tax credits for energy efficient windows, with some modifications. One important detail is that the maximum amount of tax credit for all improvements combined is $1,500 or 30% of improvement costs. This includes energy efficient roofing, insulation, HVAC and water heaters. Automobiles are not included in this limit. So to clarify, if you spend more than $5,000 on energy efficiency upgrades, your credit will be $1,500. If you spend less than $5,000, you will receive a credit totaling 30% of your total cost for all improvements. Be sure to check out the Energy Star website for all the information you will need to make an informed decision regarding energy efficient window upgrades. Be sure to click on the blue highlighted words and phrases in this article for more information.

Federal Tax Credit

Only purchase windows that meet the Energy Star criteria established by the National Fenestration Rating Council (NFRC).

Look for the Department of Energy's newly created tax credit label for energy star products. If the windows you like have this sticker, they qualify for the tax credit. This is not a mandatory sticker, however.

If there is no sticker, don't worry, the windows you like may still qualify. Simply ask the retailer, installer or check out the manufacturer's website to see if they qualify. It is mandatory that you provide documentation that the windows qualify, so be sure to check before making any purchase!

Be sure to complete the proper paperwork so you do not miss out on the tax credit! Complete IRS Form 5695 (2009 version, currently in draft form) and submit it with your 2009 taxes by April 15, 2010. Also, be sure to save your receipts!

Additional Credits

Sometimes Energy Star partners offer additional incentives to purchase energy efficient products. Use the Energy Star Rebate Finder to see if there are any special offers in your area.

Your state may also offer energy efficiency tax credit incentives. Check with the appropriate state tax agency to see if they have an energy efficiency program.

Further Reading

For additional information, check out the following resources regarding the Energy Star tax credit program.

Internal Revenue Service (IRS) guidance document, Notice 2009-53, for the revised energy efficiency tax credits for home improvements

American Recovery and Reinvestment Act of 2009