Those Federal Tax Breaks for Energy-Efficient Heating and Cooling: Use ‘Em Now or Lose ‘Em Later

September 24, 2013
Ross and Witmer

Buried within the 150-page Taxpayer Relief Act passed by Congress on Jan. 2, 2013, homeowners can get tax breaks for energy efficient heating. Congress renewed the tax credit for energy-efficient appliances, building materials, and other strategies for reducing energy use and extended the credits through the end of 2013. Upgrades that qualify for the extension are in service in 2012 or scheduled for 2013.

Homeowners have until December 31, 2013 to make improvements that qualify for a tax credit.

Types of Equipment Improvements Eligible for a Tax Credit


Air Conditioner and Heat Pumps

The benefit is up to a $300 tax credit for units that meet established criteria triggered by dates. Check with your HVAC contractor or your local IRS office or personal tax adviser.

Advanced Main Air Circulating Fan

A fan used in a fossil fuel-fired furnace that has an electric cost that is 2 percent or less of the total electrical cost of the furnace. This tax credit is worth up to $50.


An oil, propane, or natural gas furnace with an AFUE of at least 95 percent earns taxpayers as much as a $150 credit.


An oil, propane, or natural gas boiler with an AFUE of at least 95 percent earns taxpayers a maximum $150 credit.

Water Heaters

Water heaters that are electric heat pumps with an energy factor of at least 2.0 or natural gas-, oil- or propane-fired water heaters with an energy factor of at least 0.82 qualify for a tax credit of up to $300.

Tax Credits Available for Other Energy Saving Residential Improvements

The act also extended to Dec. 31, 2013 tax credits for passive improvements to residences. Items covered include energy-saving windows and doors, roofs and insulation. Check here for a complete list of projects with tax relief.


Energy tax credits are cumulative starting in 2005. They apply to your principal residence only and can reach a maximum of $500. Equipment or renovations not in service by Dec. 31, 2013 may never qualify for a tax credit.

The tax breaks for energy-efficient heating and energy use reduction may include more than one project.

For more information on how to take advantage of tax credits or for any other advice on installation, service or maintenance for your home heating and cooling systems, contact Ross & Witmer. Serving the Charlotte area since 1945, we’re always happy to help.

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