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Congress has good news for energy-conscious consumers: U.S. lawmakers have reinstated 25C tax credits  on new heating and cooling equipment also known as Energy Star. The Taxpayer Relief Act of 2012, which amends Section 25C of the tax code, brings back the credits, which expired at the end of 2011, making them retroactive to January 1, 2012. If you’ve considered purchasing energy-efficient new heating and cooling equipment to take advantage of this generous tax credit in the past but have never quite managed to make the commitment, you’ve just been given a second chance.

Availability of 25C Tax Credits

The credits are available to U.S. homeowners for new heating and cooling equipment installed in their primary residences. They can be used for existing homes but not for new construction. Neither second homes nor rentals are eligible for the credits, though second homes can qualify for other energy-efficiency tax credits.

Time Frame of 25C Tax Credits

The 25C tax credits will be retroactive to January 1, 2012 and will remain in effect through December 31, 2013. Homeowners should claim the credit when they file their taxes for the year the equipment was actually installed (even if purchased in a different year.)

Requirements for the 25C Tax Credit To qualify the equipment must be; New Of an eligible type Expected to last at least five years Installed in either 2012 or 2013 It must also comply with all applicable safety standards, efficiency ratings, and performance requirements found in the tax code for the particular equipment type.

Limitations of 25C Federal Tax Credits

The value of the credit is equal to the full cost of the equipment, up to certain specific caps, depending on equipment type. (See the list of Eligible Equipment Types and Caps, below.) However, these amounts are subject to a $500 lifetime limit, which dates back to January 1, 2006. If you have already claimed $500 in credits, you will not qualify for a further credit.  In addition, the credit is available only on qualifying equipment models which meet the requirements summarized above. Not every energy-efficient model will be eligible.

25C Tax Credit – Eligible Equipment Types and Caps:

  • Central Air Conditioners – $300
  • Electric heat pumps – $300
  • Natural gas, propane, or oil furnaces – $150 
  • Natural gas, propane, or oil hot-water boilers – $150 
  • Electric heat pump water heaters – $300 
  • Natural gas, propane, or oil water heaters – $300
  • Biomass stoves – $300 
  • Circulating fans for qualifying furnaces – $50

Other eligible energy efficiency technologies include qualifying exterior windows (storm windows or skylights), exterior doors, roofs, and building insulation.  Note: A separate tax credit is available for geothermal heat pump systems, solar water heaters, solar photovoltaic cells, wind systems, and fuel cell systems that meet the criteria for renewable energy tax credits.  “However, these technologies offer a limited credit of 10% of their cost, with a $200 cap on exterior windows.” To determine your eligibility for the credit, consult a tax professional.

25C Tax Credits Can Be Used to Purchass of an Energy-Efficient New Heating and Cooling System

There’s no better day than today to make the decision to use the reinstated 25C tax credits to your advantage. By replacing your less-efficient heating and cooling equipment or hot water heater with equipment that will save you money through increased fuel efficiency, as well as through the tax credit, you’ll save twice. Aqua Plumbing & Air can help you find just the right energy-efficient system for your needs. We’re also fully equipped to help our Venice, FL neighbors with installation and maintenance of your new equipment. Call today to find out how Aqua Plumbing & Air can help you save with 25C tax credits.

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