Summer is a great time to tackle those home improvements on your list. And under the American Recovery and Reinvestment Act (ARRA) of 2009, the energy tax credit is increased. The new law raises the credit rate to 30% of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010.

The credit applies to energy-related improvements, such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air-conditioning systems.

Note: A similar credit was available for 2007, but it was not available in 2008. Homeowners should be aware that the standards in the new law are higher than the standards for the credit that was available in 2007 for products that qualify as “energy efficient.” The IRS has issued guidance that allows manufacturers to certify that their products meet these new standards.

Homeowners may continue to rely on manufacturers’ certifications that were provided under the old guidance. For exterior windows and skylights, homeowners may continue to rely on Energy Star labels in determining whether items qualify for the credit.

Further, the Residential Energy Efficient Property Credit is a nonrefundable energy tax credit that helps individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps, and wind turbines. The new law removes some of the previously imposed maximum amounts and allows for a credit equal to 30% of the cost of qualified property.

We’re happy to help you sort out the tax credits available for your home improvements this summer. Just give us a call or send us an email.