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Do the new federal tax credits help me?

On February 16, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA) into law. The ARRA is designed to get our economy moving again with spending and tax incentives aimed at investing in our nation’s road and energy infrastructure and increasing the energy efficiency and performance of our homes and commercial buildings. How does this relate to heating, cooling and plumbing?

  • Larger Tax Credit for Traditional Heating and Cooling Improvements:
    Homeowners may be able to claim tax credits equal to 30% of the installed costs (up to $1,500) on qualifying equipment.
  • Longer Term:
    The new tax credits are retroactive to January 1, 2009, and expire on December 31, 2010... excluding geothermal improvements. The $1,500 limit is for all improvements made during the two year term, not $1500 each year.
  • Expanded Geothermal Tax Credits: 
    Homeowners who install qualifying geothermal heat pump systems can claim a federal tax credit of 30% of the installed costs... NO LIMIT! This credit must be claimed during the year the system is placed into service. The $2,000 tax credit limit has been removed. The geothermal tax credit has a longer term, from January 1, 2009 and expires December 31, 2016.
New Category of Geothermal Heat Pumps Can Now Earn the Energy Star Label

WASHINGTON— The U.S. Environmental Protection Agency is announcing new requirements for residential geothermal heat pumps (GHPs), enabling water-to-water geothermal heat pumps to earn the Energy Star label for the first time. EPA’s stringent specifications for this new category of geothermal heat pumps will help protect the environment and reduce energy costs, because GHPs that meet the new standards will be up to 45 percent more efficient than conventional pumps.

Geothermal heat pumps use ground temperature air instead of outside air to provide heating, cooling and often water heating. GHPs can be installed in new and existing homes. Because they use the constant temperature of the earth, GHPs are among the most efficient heating and cooling technologies currently available in the marketplace.

EPA worked with industry stakeholders to revise the requirements in response to growing consumer demand for water-to-water geothermal heat pumps. Water-to-water geothermal heat pumps provide heating and cooling and/or water heating to a building using liquid rather than forced air. The new requirements for water-to-water equipment complements existing efficiency and performance requirements for water-to-air and direct geoexchange GHP models. Homeowners who install geothermal heat pumps with the Energy Star are eligible for a 30 percent federal tax credit.

News release from www.epa.govRelease date: 12/14/2009