An energy-efficiency upgrade for your home can be a great gift to yourself. It not only trims your utility bill now, it can give you a tax credit next April, too. But there’s a catch: The federal tax credits of up to $500 are set to expire on December 31, and Congress may not renew them for 2012.

“The outlook for renewal of federal energy-efficiency tax incentives is uncertain at best,” says Alliance to Save Energy President Kateri Callahan, “so we encourage home owners to complete those upgrades before the ball drops in Times Square at midnight on New Year’s Eve.”

The specific home improvements that qualify for tax credits fall into a number of categories:

  • Exterior windows, skylights, and storm windows
  • Insulation, exterior doors, roofs, storm doors, and products to seal air leaks such as caulking, weather stripping, and foam sealants
  • Highly-efficient heating and cooling equipment, including central air conditioners, heat pumps, furnaces, boilers, water heaters, and biomass (e.g. corn) stoves

Each product category also must meet specific energy-efficiency requirements, which are spelled out on the Alliance’s tax credits web page [www.ase.org/taxcredits].

Percentage and/or dollar limits on particular energy-efficient upgrades include:

  • 10% of the cost of insulation and sealing materials, exterior doors, and roofs
  • 10% of the cost, up to $200, of exterior windows or skylights
  • Up to $300 for electric heat pump water heaters, electric heat pumps, central air conditioners, biomass stoves, and natural gas, propane, or oil water heaters
  • Up to $50 for advanced main air circulating fans
  • Up to $150 for natural gas, propane, or oil furnace or hot water boilers

Source: Alliance to Save Energy