Reap Financial Benefits With New Energy Efficient Windows: Tax Credits Explained In our last issue, we gave an overview of the Federal Tax Credit program that allows homeowners to take advantage of up to $1,500 in tax credits (or up to 30% of the cost) for home improvements that meet the qualifying efficiency requirements. In this issue, we thought we would focus on the specific requirements for one of the most common, and most efficient home upgrades—windows!
According to the U.S. department of Energy (DOE), heat loss through windows can account for anywhere from 10% to 25% of a homeowners' heating bill. In climates where air conditioning is in steady use, the DOE says that energy-efficient windows can reduce electricity consumption by 10% to 15%! So there is certainly something to be said for considering the quality and efficiency of your windows.
What is 'Energy Efficient'? So what exactly does “energy efficient” mean in the context of the current tax credit program? Before the American Recovery and Reinvestment Act of 2009 (ARRA) was passed, “energy efficient” meant Energy Star-qualified. This qualification took into account some or all of five different criteria, and many windows qualified. In 2006 and 2007, “Energy Star-qualified” windows were eligible for the $200 federal tax credit available at the time.
Now, under the ARRA, for windows to be “energy efficient” enough to qualify for the federal tax credit only two factors matter: U-factor and solar heat gain coefficient. U-factor measures resistance to heat flow on a 0 to 1.2 scale. The lower the rating, the greater the resistance. To qualify for tax credits, a window or door's U-factor must be a 0.30 or less. Solar heat gain coefficient measures how well the window blocks heat gain from the sun. SHGC is measured as a number between 0 and 1. The closer to zero, the more efficient the window. To qualify for credits, the SHGC of the unit must be 0.30 or less.
How To Tell If A Window Qualifies There are several ways to find out if the windows you are considering for your home qualify for the tax credits. First, you can check for the NFRC (National Fenestration Rating Council) label on the product, or check out their website for the directory of certified products at
www.nfrc.org. You can also look at the window supplier's website - many provide rating information for individual products. In some cases, the supplier may also offer a letter certifying that the windows or doors qualify for tax credits under the ARRA. Those letters are recommended but are not required by the IRS.
This is a great time to take advantage of this program to not only save some money on making some great upgrades to your home, but to save money in the future on your utility bills as well. You can visit the Energy Star Website at
www.energystar.gov/taxcredits for all of the details on this program, or feel free to contact us at (408) 274-6060 if you have questions or are interested in adding any of these energy efficient improvements to your home.
