Tax Credit Fact Sheet
New Consumer Energy-Efficiency Tax CreditsThe Energy Tax Incentives Act of 2005, a part of the new national energy law signed by the President of the United States on August 8, 2005, provides valuable federal tax credits for consumers who drive fuel-efficient vehicles and/or employ energy-efficient products in their homes. This includes qualifying Rinnai tankless water heaters.
At home, these benefits include lower home energy bills, increased indoor comfort, and reduced air pollution. On the road, consumers will increase their gas mileage so they lower their gasoline costs, and they will dramatically reduce the amount of air pollution from their vehicles.
You can get a one-time tax credit of up to $500 in total for installing efficient new windows, insulation, doors, roofs, and heating and cooling equipment in your home. All the improvements must be installed in or on the taxpayer’s principal residence in the United States.
In addition to helping savvy consumers lower their energy bills at home and on the road, the energy-efficient products eligible for the new federal tax credits actually lower the amount of federal income taxes that these taxpayers must pay Uncle Sam.
Heating and Cooling Equipment Energy-Efficiency Requirements
In order to be eligible for the tax credit, heating and cooling equipment must meet specified measures of energy efficiency:| Product | Efficiency Requirement |
| Natural Gas, Propane, Oil Water Heater | Must have an Energy Factor (EF) of at least 0.80. Only some tankless water heaters currently reach this efficiency level. |
| Central Air Conditioner | Must be in the highest efficiency tier set by an organization called the Consortium for Energy Efficiency currently seasonal energy efficiency ratio (SEER) of at least 15 and an energy efficiency ratio (EER) of at least 12.5 for most air conditioners. |
| Electric Heat Pump | Also must be 15 SEER and 13 EER and must have a heating seasonal performance factor (HSPF) of at least 9. |
| Geothermal Heat Pump | Must meet current ENERGY STAR criteria: For a closed-loop system, 14.1 EER and a coefficient of performance (COP) of at least 3.3. For an open-loop system, the criteria are 16.2 EER and 3.6 COP. For a direct expansion system, 15 EER and 3.5 COP. In addition, the geothermal heat pumps must include a desuperheater, which helps heat water, or an integrated water heating system. |
| Electric Heat Pump Water Heater | Must have an Energy Factor (EF) of at least 2.0. |
| Natural Gas, Propane, Oil Furnaces, Boilers | Must have at least a 95 percent annual fuel utilization efficiency (AFUE) to qualify for the $150 credit. To qualify for the $50 tax credit, the furnace aircirculating fan must use no more than two percent of the total annual energy use of the furnace. |
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