Residential Energy Efficiency Tax Credit: Expired 12/31/2016



Residential Energy Efficiency Tax Credit for 2016 tax return

We are talking taxes!  We understand that you love taxes just as much as you love traffic and YouTube ads. Yet saving money on your taxes is a good thing – think open roads and ad-free cat videos!

As 2016 ended, so did many of the residential energy efficiency tax credits. But if you had a licensed professional HVAC dealer install a qualifying, high-efficiency residential indoor comfort systems or qualifying HVAC component by December 31, 2016, you should consult your tax advisor to determine how these tax credits may affect your own 2016 taxes.

*A tax credit can reduce the amount of federal income tax you may have to pay. For example, if you owe $800 in taxes at the end of the year, and you get a $300 tax credit, your actual tax bill could be lower.1

Homeowners are limited to a maximum allowable tax credit of $500 between 2006 and 2016, whether those purchases came in the form of upgraded insulation, windows, HVAC equipment or other eligible improvements. To determine if you have already claimed your single-family home tax credits prior to 2016, consult your tax advisor.

Some 2016 HVAC tax credits include, but are not limited to:
  • Air conditioners listed as ENERGY STAR® Most Efficient 2016 may qualify for a $300 tax credit.
    • Requirements for Split Systems: SEER>=16
    • Requirements for Package Systems: SEER>=14
  • Heat pumps that are ENERGY STAR® certified may qualify for a $300 tax credit.
    • Requirements for Split Systems: SEER>=16, HSPF >= 8.5
    • Requirements for Package Systems: SEER>=14, HSPF >= 8.5
  • Gas furnaces that are ENERGY STAR® certified (except those for U.S. South only) meet the requirements for the gas furnace $150 tax credit.
    • Requirement: AFUE > 95
  • Gas furnace fans that have earned the ENERGY STAR® rating may qualify for a $50 fan tax credit.
    • Requirement: Annual electricity use < 2% of total furnace energy

And of course, there is a form for that! According to Energy Star, homeowners with residential energy-efficient tax credit qualifying purchases should discuss the IRS form 5695 with their tax advisor. Homeowners should also keep any related receipts and the Manufacturer’s Certification Statement for their records.2  The qualifying product(s) must have been installed by midnight on New Year’s Eve in order to claim the 2016 tax credit. A full list of Energy Star® tax reducing qualified products can be found on energystar.gov and at goodmanmfg.com.

NOTE: This information is provided for discussion purposes only and is provided as a generic guideline. No consideration should be taken that this information represents tax advice. Contact your local tax professional to determine how these credits may apply to your circumstances and affect your own taxes. You can also visit  www.energy.gov/taxbreaks for more information.

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1 Difference Between A Tax Credit And A Tax Deduction? (n.d.). Retrieved from Energystar.gov: https://energystar.zendesk.com/hc/en-us/articles/211437608-What-s-the-difference-between-a-tax-credit-and-a-tax-deduction-
2 Tax Credits/ Rebates/ Financing/ Grants. (n.d.). Retrieved from Energystar.gov: https://energystar.zendesk.com/hc/en-us/articles/211437868-How-do-I-apply-for-the-tax-credit-What-tax-form-do-I-need-for-the-energy-efficiency-tax-credits-