April 22, 2009
TG-99

Treasury Celebrates Earth Day with
13 Energy Tax Credits, Bonds and a New Grant Program

Increased Tax Credits for Making Energy Efficiency Home Improvements

WASHINGTON – In confronting the most severe financial crisis in generations, the Obama Administration has focused simultaneously on helping Americans save money while investing in our nation's economic future.  To that end and in celebration of Earth Day, the Treasury Department and the Internal Revenue Service (IRS) are highlighting today 13 new or expanded energy incentives under the Administration's American Recovery and Reinvestment Act of 2009 that provide innovative ways for businesses and consumers to save money while greening America. Also today, Treasury and the IRS are providing a transition safe harbor for consumers and businesses, necessary because of the Recovery Act's increase in energy efficiency standards for home energy saving improvements. 

Due to the Recovery Act, homeowners can now claim larger tax credits for installing alternative energy equipment, as the new law eliminates limits on the credits that can be claimed for solar water heaters, wind turbines, and geothermal heat pumps.  The Act also provides for a credit of 30 percent of the cost of certain home energy-saving improvements, such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems.  Homeowners can now claim up to $1,500 of these credits during 2009 and 2010, instead of the $500 lifetime limit under the old law.

"These new or expanded energy incentives do two critical things: they increase savings for Americans and they help protect the environment," said Treasury Secretary Timothy Geithner. "From day one, this Administration has pursued every option to help ordinary Americans.  The 13 energy incentives in the Recovery Act provide $12.7 billion in renewable energy and energy efficiency incentives.  These incentives will lead to an increase in jobs at energy-specific businesses, investment in our long-term energy needs, and protect our environment. Those are results we should applaud on Earth Day and throughout the calendar year."

Importantly, through the safe harbor, homeowners can rely on existing manufacturer certifications or appropriate Energy Star labels when seeking to take advantage of the Recovery Act tax credit by purchasing qualifying products until June 1, 2009, and businesses can thus continue to move existing inventory off their shelves.

Andersen Windows of Bayport, Minnesota has now recalled nearly half – 250 of the 560 – workers it laid off in January – a move made possible in part by the tax credit for energy efficient home improvements. Andersen Windows also cites the first-time homebuyer credit as another factor, as this tax credit helps to get existing homes off the market so that builders can start building again. 

The 13 energy incentives highlighted today focus on areas as diverse as electric car plug-ins and incentives for businesses to produce electricity from wind energy projects.  For more information on these provisions click here or visit IRS.gov.

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