This previously expired tax credit was renewed retroactively in December of 2015 with the passage of the Consolidated Appropriations Act. This recently renewed tax credit provides homeowners with a tax credit of up to $500 for energy efficiency improvements to their homes for installations performed retroactively in 2015 or installed during the 2016 calendar year.
This credit applies to energy efficiency improvements in the building envelope of existing homes and for the purchase of high-efficiency heating, cooling and water-heating equipment. Efficiency improvements or equipment must serve a dwelling in the United States that is owned and used by the taxpayer as a primary residence. The maximum tax credit for all improvements made in 2011 - 2016 is $500. The cap includes tax credits for any improvements made in any previous year. If a taxpayer claimed $500 or more of these tax credits in any previous year, any purchases made in 2011 - 2016 will be ineligible for a tax credit.
According to the U.S. Department of Energy, the following Building Envelope Improvements are included as part of the Residential Energy Efficiency Tax Credit:
"Owners of existing homes may receive a tax credit worth 10% of the cost of upgrading the efficiency of the building's envelope. Installation (labor) costs are not included and the credit is capped at $500 for all improvements. To be eligible for the credit, the improvement must meet the prescriptive requirements established for it under the 2009 International Energy Conservation Code (including supplements). The following improvements are eligible for the tax credit:
Insulation materials and systems designed to reduce a home's heat loss or gain
Exterior doors and windows (including skylights) --- no more than $200 in total credits can be claimed for windows in years 2006 - 2016 Equipment must meet version 6.0 Energy Star program requirements.
Pigmented metal roofs designed to reduce heat gain, and asphalt roofs with appropriate cooling granules, which are Energy Star certified.
Heating, Cooling and Water-Heating Equipment
Taxpayers who purchase qualified residential energy-efficient property may eligible for a tax credit. The credit is equal to the full cost of the equipment up to the following caps:
Advanced main air circulating fan: $50
Natural gas, propane, or oil furnace or hot water boiler with an annual fuel utilization rate of 95 or greater: $150
Electric heat pump water heater with an energy factor of at least 2.0: $300
Electric heat pump which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
Central air conditioner which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
Natural gas, propane, or oil water heater which has either an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent: $300
Biomass stoves that use "plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers". Systems must have a thermal efficiency rating of at least 75 percent to qualify: $300"
For Additional information on the Residential Energy Efficiency Tax Credit please visit the following websites: