The Tax Relief, Unemployment Insurance Re-authorization, and Job Creation Act of 2010 was signed into law December 17, 2010. Section 25c tax credits (the official name of the energy tax credits) are available to taxpayers who make energy efficient retrofits to their homes. The tax credits are extended through 2011, but at a significantly reduced value compared to the previous tax credits of 2009-2010.
Starting on January 1, 2011 and through December 31, 2011, an eligible homeowner can claim 10% of the costs, capped at $500, for the installation of qualified energy efficient improvements, subject to certain limits.
Under the new law, for HVAC, the maximum a homeowner could claim is $300 for a qualified central air conditioner or heat pump, and $150 for a qualified furnace or hot water boiler, and $50 for any advanced main air circulating fan. Those 3 add up to the $500 maximum.
Beyond the change to the tax credit values, the new law will increase the qualifying standards for natural gas hot water boilers, propane hot water boilers, oil furnaces, and oil hot water boilers to 95% AFUE. The qualifying standards for natural gas furnaces and propane furnace remain at 95% AFUE.
The qualifying standard for central air conditioners and heat pumps, which were modified by the Stimulus bill in 2009, are not changed. Therefore, a central air conditioner must meet or exceed 16 SEER and 13 EER; and an air source heat pump must meet or exceed 15 SEER and 12.5 EER and 8.5 HSPF, in order to qualify for the tax credit.
Finally, the new law reinstates the lifetime credit caps, which disqualify any homeowner who has claimed more than $500 in Section 25c tax credits since January 1, 2005, from any further credits.
Qualifying HVAC Equipment Tax Break Down:
- Central Air Conditioners: 16 SEER and 13 EER = $300 credit
- Heat Pumps: 15 SEER and 12.5 EER = $300 credit
- Natural Gas Furnaces: 95% AFUE = $150 credit
- Advanced Main Air Circulating Fan: ECM Blower = $50 credit
Houston Air Conditioning & Heating – 2011 HVAC Energy Tax Credit