Tax Credits for Non-Solar Water Heaters

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Published: January 09, 2013
By: Gil Rudawsky
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2 People Did It

Don’t get in hot water over fuel bills. If you installed an efficient water heater in 2012 or will in 2013, you might be eligible for a tax credit.

Effort: Low 1 day (research)
Saves: Med $115/yr (off energy bills)
Investment: Med $1,500-$2,500 (tankless)

Doing the dishes, taking a shower, or cleaning your clothes — you need hot water and lots of it. The government understood, and offers an energy tax credit for adding a more efficient hot water heater to your home.

Tax credit limits and deadlines:

You must have installed the water heater by Dec. 31, 2013.

10% of expenditures, up to $300, for a non-solar water heater, including installation. (You can spend a lifetime total of 10% of expenditures up to $500 for all approved energy purchases combined. If you already claimed energy tax credits up to this limit, you’re done.)

Save receipts and labels for Uncle Sam.

File IRS Form 5695 with your return.

There are many different kinds of hot water heaters, so the Energy Star site is a good bet for info. It’s very specific on what is and is not credit-eligible. For instance, it must have a thermal efficiency of at least 90%.

Don’t rely solely on contractors who may not know the details or who promise their products will get the credit in order to make a sale.

Read on to learn if you qualify for the tax credit:

Savings, cost, and payback period
Advantages of tankless systems
Other types of water heaters
Think smart for a new water heater

Next: Savings, cost, and payback period

Gil Rudawsky

has covered business and consumer issues for 18 years, most recently as a deputy editor at the Rocky Mountain News. He lives in a house built in the 1930s, and always keeps the home’s character in mind when making upgrades.

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