Rebate and Tax Incentive Programs PDF Print E-mail

Rebate and Tax Incentive Programs

Tax credits for homeowners under the Energy Bill of 2005

Under the new energy bill, consumers are eligible for up to a $500 tax credit for money they spend on energy improvements in their homes. For example, you can get a $300 credit for highly efficient central air conditioner, heat pump or water heater, or a $200 credit for installing energy-saving windows. To be eligible for the tax credit, these improvements must be made between Jan. 1, 2006 and Dec. 31, 2007. You would receive the credit in the tax form you file by April 15th of 2007 or 2008.

While not directly affecting consumers, manufacturers of energy efficient clothes washers, dishwashers and refrigerators are eligible for tax breaks themselves, which may lead to increased availability and a reduction in prices for these energy-saving appliances. The final criteria for which products and improvements are eligible for the tax credit will be set by the DOE, EPA, and Treasury. Check back in mid October 2005 for more information. From Energy Star

A summary of the tax credits for consumers for 2006 and 2007 in the Energy Policy Act of 2005 is at

Some states and utilities also offer rebates if you purchase energy-efficient appliances. Rebates reduce your initial purchase price of high-efficiency models, making them even more attractive. Rebate programs are most common for high-efficiency refrigerators, air conditioning equipment, and clothes washers. Some gas utilities offer rebates for high-efficiency furnaces, while water utilities may offer rebates for water-saving clothes washers. If you plan to buy a major appliance soon, ask your utility if it offers rebates for efficient models.

A number of states have introduced tax incentives—typically income tax credits or elimination of state sales tax—for the purchase of high-efficiency appliances. For more information on rebates and state tax incentive programs, see the ACEEE Web site for a state-by-state summary of programs at


Natural Resources Defense Council Some states offer rewards for buying the most energy-efficient appliances. Connecticut and California, for example, have rebate programs that will refund part of the purchase price of certain new energy-efficient appliances. Maryland eliminates sales tax on some appliances with the Energy Star label. Check with your local utility and the Energy Star Rebate Locator at to find out if cash rebates or other incentives are available in your area.

The Database of State Incentives for Renewable Energy (DSIRE) is a comprehensive source of information on state, local, utility, and selected federal incentives that promote renewable energy.

For information on how to get an energy efficient mortgage, s ee the section excerpted from No-Regrets Remodeling by Home Energy magazine at

EEMs are added on to your regular mortgage. They allow you to make cost-effective improvements which will save you more each month on your utility bill than the cost they add to your monthly mortgage payment. The government-sponsored loans have several special benefits. First, they let you add on the money for the improvements to your mortgage even if this means you exceed traditional loan limits. Second, you don't have to qualify for the additional money. Third, and probably most important, 100% of the cost of the improvements can be financed. Since all improvements must be cost effective to qualify, this means there are no out of pocket expenses. Your mortgage payments go up a little, but your utility bills go down more. You can even realize a positive cash flow. It's like getting paid for improving your home.


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