Federal Tax Credit on Energy Efficient Water Heaters

A reminder that there is a 30% upto $1500 Federal Tax Credit on Qualifying Gas, Oil, Propane Water Heaters as well as Electric Heat Pump Water Heater and Solar Water Heaters. If your water heater is on its last legs, you might as well upgrade now and save some money.

Gas, Oil, Propane Water Heaters must have Energy Factor >= 0.82 or a thermal efficiency of at least 90%. AO Smith makes the Vertex 100 that is very efficient but requires PVC pipe venting not normal metal venting. Also consider installing radiant floor heating instead of using a furnace as these newer water heaters support it.

Consider an on demand Tankless Water Heater if your situation allows for it.  They need ready access to a good size gas pipe and exhaust vent.

Electric Heat Pump Water Heater requirements are the same as ENERGY STAR: Energy Factor >= 2.0.

Solar Water Heaters are covered if at least half of the energy generated comes from the sun and the system is certified by the Solar Rating and Certification Corporation (SRCC).

This credit reduces the amount of tax you owe for 2009. The credit is a reduction of total income tax at the bottom of your return, up to $1500. This tax credit is a non-refundable tax credit. Consult your tax adviser for details. Use it or lose it!

Products must have been purchased between January 1, 2009 and December 31, 2010.  Solar water heater purchases are covered through 2016.

The tax credit is an aggregate, i.e., the total $1500 can include other energy efficient items. For instance, if a consumer claims $900 on a new stove, then he will have $600 to purchase additional energy saving products in the same tax year.

If a taxpayer uses the entire $1500 tax credit on a competing product then they cannot use it for a biomass stove in that same tax year.

$1500 seems like the total credit for both 2009 and 2010 combined.

Double dip! Local utilities like PGE have their own rebates for Energy Efficient Appliances purchased in 2009.  PGE has a $30 rebate for energy efficient water heaters. Gas ones with Energy Factor 0.62 or greater or Electric ones with Energy  Factor 0.93 or greater.  Note: It is difficult to find larger sized water heaters with Energy Factor’s this high.

Related posts:

1. Federal Tax Credit on Furnaces and Boilers
2. Federal Tax Credit on Windows, Doors, Skylights
3. Federal Tax Credit on Insulation
4. Energy Efficient Eco Friendly Water Heater
5. Reduce Water Heater Energy Use

Posted on October 22nd, 2009
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