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HVAC Tax Credits in The American Recovery and Reinvestment Act of 2009 [The Economic Stimulus Bill]
This memo contains a summary of important HVAC-related tax credits included in the 2009 stimulus package about the new legislation. These are general guidelines only and may not be applicable in all circumstances. Taxpayers are encouraged to consult with a tax professional.
On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA) into law. The legislation combines spending and tax incentives designed to get the American economy moving again by investing in our nation’s road and energy infrastructure, and providing incentives for increasing the energy efficiency and performance of America’s homes and commercial buildings.
Specifically for HVAC contractors, the new law makes important changes to existing tax incentives for homeowners who make qualified improvements to HVAC, water heating equipment, and other energy related improvements to their primary residences.
Residential Tax Credit Details
Greater Tax Credit
For qualified improvements (see the table below), homeowners may be able to claim tax credits equal to 30% of the installed costs (up to $1,500).
Longer Term
The new tax credits are retroactive to 1/1/2009 and expire on 12/31/2010. The $1,500 limit is for all improvements made during the two year term, not $1500 each year.
Per-Appliance Caps Removed
Subject to the 30% of installed cost limitation, homeowners may use the entire $1,500 tax credit limit on a single qualifying improvement. The previous per-appliance caps that limited the homeowner to just $150 for a high efficiency furnace or $300 for a high efficiency central air conditioner or heat pump have been removed.
Lifetime Limit Removed
Homeowners that previously claimed tax credits in 2006 or 2007 are eligible for the full $1,500 limit. Also, HVAC contractors should be aware that the $1,500 limit applies to many types of energy efficient home improvements, including windows, doors, shingles, and insulation. All of these various contractors will be competing with HVAC contractors for the work related to these tax credits.
The following chart is an excerpt as of March 10, 2009 from the Energy Star website
http://www.energystar.gov/index.cfm?c=products.pr_tax_credits#s1
SUMMARY OF HVAC TAX CREDITS FOR HOMEOWNERS
Product Category |
Product Type |
Tax Credit Specification |
Tax Credit |
Notes |
HVAC |
Central A/C |
Split Systems:
EER >=13
SEER >= 16
Package systems:
EER >= 12
SEER >= 14 |
30% of cost, up to $1,5002 |
For a list of qualified products, go to the Consortium for Energy Efficiency product directory, click on Air Conditioners, then in the “CEE Tier” enter “Residential Advanced Tier 3” for CAC Split Systems, and "Residential Tier 2" for CAC Package Systems and ASHPs.
Note — not all ENERGY STAR products will qualify for the tax credit. View ENERGY STAR criteria. |
Air Source Heat Pumps |
Split Systems:
HSPF >= 8.5
EER >= 12.5
SEER >= 15
Package systems:
HSPF >= 8
EER >= 12
SEER >= 14 |
30% of cost, up to $1,5002 |
Natural Gas or Propane Furnace |
AFUE >= 95 |
30% of cost, up to $1,5002 |
For a list of qualifying products go to the Gas Appliance Manufacturing Association
Not all ENERGY STAR products will qualify for the tax credit. View ENERGY STAR criteria.
ENERGY STAR Spec:
Gas Furnaces: AFUE >= 90
Oil Furnaces: AFUE >= 85
Boilers: AFUE >= 85 |
Oil Furnace |
AFUE >= 90 |
30% of cost, up to $1,5002 |
Gas, Propane, or Oil Hot Water Boiler |
AFUE >= 90 |
30% of cost, up to $1,5002 |
Advanced Main Air Circulating Fan |
No more than 2% of furnace total energy use |
30% of cost, up to $1,5002 |
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2 Subject to a $1,500 maximum per homeowner for all qualifying improvements combined, which includes heating and cooling equipment, water heating equipment, shingles, insulation, windows, and doors.
Energy Star is a program developed jointly by the U.S. Environmental Protection Agency and the U.S. Department of Energy. Parties are encouraged to check the website for updates or additional information.
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