Homeowners may qualify for a federal tax credit for making improvements or installing appliances designed to boost the energy-efficiency of a home.There are several tax credits for residential energy efficiency that have been renewed. These tax credits are available for energy efficient purchases -- such as solar panels added to your home -- made in 2016, as well as retroactive to purchases made in 2015. EnergyStar products, which boast 30% less energy usage, are eligible for tax credits. Initial credits that have been renewed were for purchase and installation of qualifying energy-efficient products in your main home in the years 2006, 2007, and 2009 through 2014. The requirements for the residential energy tax credits vary for each year that the credit is available.Homeowners may be eligible for the nonbusiness energy property credit. This credit is worth 10% of the purchase price of qualified energy-efficient products installed at the taxpayer's main residence. Qualified energy-efficient products include:

You can find a list of qualifying home improvement equipment on the EnergyStar web site.The tax credit for nonbusiness energy property is restricted to improvements to and appliances installed at a primary residence. Improvements made on rental homes, second homes, or vacation property are not eligible for this tax credit.The following types of equipment are eligible for a 30% tax credit with no maximum tax credit amount through December 31, 2016:You can install "solar panels, solar water heating equipment, or a fuel cell power plant to their homes in the United States. central air conditioning units canadaIn general, a qualified fuel cell power plant converts a fuel into electricity using electrochemical means, has an electricity–only generation efficiency of more than 30 percent and generates at least 0.5 kilowatts of electricity," the IRS explained in IR-2006-34. 5 ton ac unit coverage

The tax credit amount is 30% of the cost, including any labor costs for installing the equipment. The tax credit is available for equipment installed at the taxpayer's main residence. The residential energy efficient property credit is reported on Form 5695, Part I.Energy Tax Credits Reduce Your Cost BasisYou must reduce the cost basis of your main home by the dollar amount you claim for the residential energy tax credits. The IRS explains in Publication 523: "Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures."air handling unit suppliersEnergy Credits Tax Forms and Instructions IRS Form 5695 (PDF, includes instructions)Summary of Tax Incentives from the Energy Star Web siteUpdate: The federal tax credits for wood heaters has been extended through Dec. 31, 2016.  More more detail on the 2015/16 extension, click here.

How to claim the credit if you purchased a stove in 2015: You need to use IRS Form 5695. Put $300 in line 22A and then use Line 52 to show that amount on your 1040 form. Click here for more advice (or consult with a tax professional as we cannot and do not give taxFor more background and details about the tax credit, read on. Alliance for Green Heat, January 2, 2013 - Congress passed a bill addressing parts of the Fiscal Cliff, and it included a reinstatement of the $300 tax credit for biomass heaters that are 75% efficient using lower heating value. Another provision of the bill extended the wind production tax credit for one more year. The biomass stove provision allows the full cost of the equipment and installation up to $300 for stoves bought in 2013 and it is retroactive, so that all eligible stoves purchased in 2012 can also get the credit. This means that every stove purchase will be able to collect the full $300 tax credit because all EPA certified stoves cost more than $300 and virtually every EPA certified stove claims to meet the 75% efficiency threshold.

However, a taxpayer could not collect the full $300 if they have already recieved tax credits under this provision in previous years and the total amount would be over $500. This credit was allowed to expire at the end of 2011 and H.R. 8 extends it through December 31, 2013. In addition to the purchase price, consumers can include the cost of professional installation which is important to the proper and safe operation of biomass stoves. The bill language that makes it retroactive did so by just extending the credit that existed in 2011, through  December 31, 2013: The Alliance for Green Heat applauds the reinstatement of the tax credit for wood and pellet stoves. "This modest tax credit is important for low and middle-income consumers who need an affordable alternative to fossil fuels," said John Ackerly, President of the Alliance for Green Heat. "However, when tax payer money is used for incentives, we believe it should go to the cleanest and most efficient stoves on the market, not all stoves on the showroom floor.

The 75% efficiency standard is virtually meaningless because manufacturers can use any number of calculations to render all stoves eligible.This is a disservice to consumers who may unwittingly buy a 50% or 60% efficient wood or pellet stove and not enjoy the cost savings they expected," Ackerly said. The provision relating to biomass heating equipment is part of a much larger package of energy efficiency equipment.  Despite efforts by some to increase the maximum rebate amount and make other changes to the biomass equipment and all the other pieces of equipment, Congress just extended the language that Congress had approved in 2010. This tax credit extension for energy efficiency equipment, including windows, insulation and other HVAC equipment, is estimated to cost the US government $2.2 billion dollars.  The Alliance is trying to get the exact amount that the biomass heating equipment costs. More details about the tax credit will be included in the Alliance for Green Heat's January newsletter, which will be sent next week.