HVAC Tax Credits in 2009 Stimulus

On February 16, 2009 President Obama is expected to sign the American Recovery and Reinvestment Act of 2009 (ARRA) into law.  The bill combines spending and tax incentives designed to get the American economy moving again by investing in our nation’s road and energy infrastructure, and increasing the energy efficiency and performance of America’s homes and commercial buildings.
The new law makes important changes to existing tax incentives for homeowners who make qualified improvements of higher efficiency HVAC and water heating equipment to their primary residences.

Residential Tax Credit Details

Larger Tax Credit:
For qualified improvements, homeowners may be able to claim tax credits equal to 30% of the installed costs (up to $1,500).

Longer Term:
The new tax credits are retroactive to January 1, 2009, and expire on December 31, 2010.  The $1,500 limit is for all improvements made during the two year term, not $1,500 each year.

Per-Appliance Caps Removed:
Homeowners may use the entire $1,500 tax credit limit on a single qualifying improvement.  The previous per-appliance caps that limited the homeowner to just $150 for a high efficiency furnace or $300 for a high efficiency central air conditioner or heat pump HAVE BEEN REMOVED!

Lifetime Limit Removed:
Homeowners that previously claimed tax credits in 2006 or 2007 are eligible for the full $1,500 limit.

Expanded Geothermal Tax Credits:
Homeowners who install geothermal heat pump systems may be able to claim up to 30% of the installed costs in tax credits in the year the system is placed into service.  The $2,000 tax credit limit has been removed.  The geothermal tax credit has a longer term, from January 1, 2009 and expires December 31, 2016.

The $1,500 limit applies to many types of energy efficient home improvements, including windows and doors, roofing shingles and insulation.  All of these contractors will be competing for the work related to these tax credits.

View the Tax Credit FAQs