What You Need to Know About The Energy Tax Credit

Energy Tax Credit

Almost everyone who calls these days asks us about the American Recovery & Reinvestment Act (ARRA) Tax Credit for Windows, Doors & Skylites. This is known by several names, including “Energy Tax Credit”, “Stimulus Package Tax Credit”, “30/30 Credit” and even “Obama Tax Credit”. 

In some cases (but not all—more on that later), this provides an excellent opportunity to upgrade windows and doors! As with all legislation, the details matter, and we at Window Traditions, as well as our suppliers, have spent the last several months educating ourselves on this opportunity. 

Although there are many details (IRS guide), here are the basics. Ask your tax professional for official advice!.

Tax Credit Basics

1.  Credit is 30% of the cost of the qualifying products, up to a maximum credit of $1500  for 2009-2010. This equates to a tax credit on purchases up to $5000.

2.  The maximum applies to ALL items purchased under this act, including other products such as insulation, roofs, HVAC, water heaters, etc.)

3.  Installation costs do not apply.

4.  Commercial projects and residential new construction projects do not apply.

5.  This is an actual “tax credit”, not a deduction, so the credit comes off of the bottom line you pay in taxes.  That means that it actually reduces the amount owed to the government at tax time, or actually increases your refund!

6.  In order for the products to qualify, they need to meet a testing standard of < .30 U Value and < .30 Solar Heat Gain Coefficient (SHGC).  The National Fenestration Research Council (NFRC),  an industry group, oversees the testing of window and door products, and issues a written product label sticker to verify a certain product meets these requirements. 

7.  Manufacturers with products that qualify have issued a “Manufacturer’s Certification Statement” that lists their qualifying products and attests to the accuracy of the data. Because product stickers are often inadvertently removed, this statement and a receipt are all that is required to file for the tax credit. See our Education section to download pdf versions of these manufacturer's certifications.

Why it’s a good thing

This tax credit has provided a terrific opportunity for homeowners to save some money on home improvements, especially in a difficult economy, while money may be tight. 

Sometimes, this allows homeowners to replace more windows or doors than they originally planned, for the same price they had in their budget. 

Sometimes, this encourages homeowners to upgrade to a better product than they would have originally used, which increases home values over time.

And, most of all, the windows that qualify for the tax credit are designed to save homeowners on energy costs over time.  So, in addition to the $1500, homeowners are getting ongoing “energy credits” every month for the life of the product in the form of lower heating and cooling bills!

Why it is not ALWAYS the best thing for YOUR project

So, this is great news, right???  Well, yes, in many cases, this is a great way to save some money!  But, it’s not always the best idea!

Why? 

For one thing, because it is a government program, the “official requirements” don’t always determine the best product for a project. Smaller manufacturers often don’t have the resources to undergo expensive NFRC testing, even though their products might be the perfect fit for your home—they may be cost effective and save you money on energy costs. They just didn’t take the “test”!

Also, there are many products that are very energy efficient, however they don’t quite meet the arbitrary standard of .30/.30 set in this bill. Some of these products may have the same glass as a product that does meet the requirements, but have one small feature that might cause the SHGC number to raise to .31, such not having grilles.  We feel confident that the actual energy performance would be virtually the same with those products, however due to very stringent testing they would not qualify. 

Additionally, there is some discussion among energy experts that the .30/.30 limits do not represent the most energy efficient standard depending on the climate.  For example, a Northern climate which has more heating days than a Southern climate, may want a higher SHGC on windows of certain exposures.  This is why Energy Star actually has 4 different climate zones defined in the continental US.  For more information, you may wish to visit (http://www.energystar.gov).  There are currently discussions in Congress about changing the tax credit in 2010 to incorporate Energy Star climate zones. 

Let your Window Traditions of Georgia sales consultant help you determine the best product for YOUR project.  We will work to save you money in energy costs as well as provide the right product at the right price.