Congress has extended a number of tax credits for homeowners who make energy-efficient improvements to their home, as long as the equipment they install is certified by the manufacturer as qualifying for the programs. The credits fall into two categories:
(1) Traditional improvements
You can get a credit for 100% of your expenses for central air conditioners, electric heat pumps, and a variety of water heaters (up to $300); natural gas, propane, and oil furnaces and hot water boilers (up to $150); and furnace air circulating fans (up to $50).
You also can get a credit for 10% of your expenses for insulation, heat-reducing roofing, and energy-saving windows (up to $200).
There is a maximum overall credit of $500 for all these items, which is reduced by any credits you’ve taken in the past. The credit doesn’t apply to vacation homes. This program expired at the end of 2014, but Congress has extended it to cover improvements made in 2015 and 2016.
(2) ‘Green’ improvements
You can get a credit for 30% of your expenses for solar, wind, and geothermal energy equipment. There’s no limit on the amount of the credit, and you can even use it for a vacation home.
This credit was set to expire at the end of 2016, but Congress extended it though 2021 (although the rate will drop from 30% to 26% in 2020 and to 22% in 2021).