Thanks to Tax Credits, Conserving Energy Makes Extra Cents

Finding sensible low-cost ways to cut back on your energy use can help you save hundreds on your annual utility bills. But some of those bigger investments that will help you save even more might not be as hard to afford as you think. The federal government offers several tax credits to encourage Americans to buy energy-saving and producing appliances.

The Energy Resource Center wants to help you understand what improvements come with tax rebates.

10 percent tax credit

During the 2012 and 2013 tax years, homeowners can get 10 percent of the cost of the following upgrades to their principal residence up to $500:

  • Door and skylights – Warm air can seep through poorly manufactured, installed, or sealed doors or skylights. Energy Star-qualified replacements are eligible for the tax rebate.
  • Metal and asphalt roofs – The right kind of roof can reflect more of the sun and reduce the roof temperature by up to 100 degrees. That could make a big difference in your summer cooling expenses and electricity consumption.
  • Insulation – Many Colorado homes lack adequate insulation. Adding quality insulation is one of the most significant improvements a homeowner can make to reduce heating and cooling expenses.

Specific amounts and caps

The federal government also offers specific tax credits for the following energy-efficient home improvements.

  • Biomass stoves – Stoves that burn organic waste, such as agricultural crops or wood pellets, for home or hot water heating are eligible for a $300 tax credit.
  • Advanced circulating fans – Fans that blow the air heated or cooled by your furnace or air conditioning system through your ducts qualify for a $50 credit.
  • Air source heat pumps – Heat pumps move cold air into warm spaces and warm air into cool spaces. They are extremely efficient in moderate climates and qualify for a $300 tax credit.
  • Central air conditioning – Qualified air conditioners are eligible for a $300 tax credit.
  • Natural gas, propane or oil furnaces and hot water boilers – These efficient home heating systems are eligible for a $150 tax credit.
  • Water heaters – Gas and electric heat pump water heaters are eligible for a $300 tax credit.
  • Windows – Upgrading your windows can help you save dramatically on energy bills, but you can only get a tax credit for window replacements up 10 percent of the cost, up to $200.

30 percent tax credit

While many home improvements are designed to help you consume less energy by using less, these investments could enable you to eliminate your electric bill entirely by generating your own power. Even with this substantial tax credit and the big rebates offered by most Colorado utilities, these systems still require a substantial financial investment from the homeowner.

  • Geothermal heat pump – These systems drill into the ground and use the earth’s temperature to heat and cool a home and sometimes even to heat hot water.
  • Small wind turbines – It’s possible to generate your own wind energy at home.
  • Solar hot water heaters  – Solar hot water heaters use the sun’s heat to warm your water supply, eliminating or reducing the need for gas or electric hot water heaters.
  • Solar photovoltaic systems – Solar panels have grown increasingly more affordable and popular in recent years. Less of your local utility’s power is needed because this system generates its own electricity.
  • Fuel cells – These systems can store energy generated from renewable sources like wind or solar power. The 30 percent tax credit is capped at $500 per .5-kilowatt hours of capacity.

The Energy Resource Center performs free home energy audits for income-qualified residents in El Paso, Teller, Fremont, Elbert, Douglas, Alamosa, Conejos, Mineral, Saguache and Rio Grande counties, and will even install some of these upgrades free of charge.

However, the Energy Resource Center can also perform home energy audits for homeowners who don’t qualify for free services. Your fee helps to fund our nonprofit’s efforts to keep Colorado families warm and safe through the winter and our audit will help you identify the most cost-effective improvements and understand these tax rebates.



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