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 through 12/31/2010. If your water heater is on its last legs, you might as well upgrade now and save some money. New water heaters require less energy and time to heat water. Reduce waiting time between showers and doing laundry.

Gas, Oil, Propane Water Heaters must have Energy Factor >= 0.82 or a thermal efficiency of at least 90%.  Newer Hybrid water heaters are also available.

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 for many models.

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).

AO Smith makes the Vertex 100 water heater that is very efficient but requires PVC pipe venting not normal metal venting. Also consider installing radiant floor heating instead of using a gas furnace as these newer water heaters support radiant heating.

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. Beware that those affected by the Alternative Minimum Tax (AMT) in 2010 may not qualify for the rebate unless Congress passes an AMT patch.

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 water heaters 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.

Be sure to check out our reduce water heater use, water saving tips and ways to save energy.

Related posts:

1. Hybrid Water Heaters – GE GeoSpring Water Heater
2. Federal Tax Credit on Windows, Doors, Skylights
3. Federal Tax Credit on Furnaces and Boilers
4. Federal Tax Credit on Insulation
5. Federal Tax Credit – Wood Heat Stoves, Pellet Stoves, Fireplace Inserts
6. Federal Tax Credit on Geo-Thermal Heat Pump
7. Energy Efficient Eco Friendly Water Heater
8. Tankless Water Heater

Posted on August 31st, 2010
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