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Credit for Energy Saving Home Improvements for 2011

600px-Windfarm_112This tax credit has undergone a change from previous years.  In 2010, for example, you could achieve a credit for as much as 30% of the cost of your energy-saving home improvements, with a ceiling of $1,500.

Beginning January 1, 2011, the credit rate is now just 10%, and the ceiling has been lowered to $500.  Something important to keep in mind about this credit:  any credit claimed in prior years (2009 and/or 2010) will be used to reduce your ceiling.  In other words, if you claimed the full credit (or any amount up to $500) on a previous year’s tax return, you have no energy-saving home improvement credit available to you.

In addition to the changes above, there are specific item caps in place as well.  For example, if you are putting in a new furnace or water heater, the credit for those units is capped at $150.  If you’re putting in a biomass fuel stove (those are the corn-fueled or pellet-fueled furnaces), then you can claim up to a $300 credit against the purchase price.  And if you’re putting in new energy-efficient windows, the cap is $200.

One area that the credit remains at 30% is with alternative energy systems, such as wind-power or solar panels, so if you’re really into the alternative energy option this could be helpful.

Photo by Wikimedia

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