What Determines Eligibility for an Energy Tax Credit?


Quick Answer

According to the U.S. Department of Energy, eligibility for a residential energy tax credit is determined by the date the renewable energy system was installed and the type of renewable energy technology used. In some cases, the equipment must be certified and the system must meet a size requirement.

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Full Answer

The eligible energy technologies are solar water heating, solar electric power, wind energy, fuel cells and geothermal heat pumps, as of 2015. Taxpayers may claim a credit of 30 percent for qualified expenditures for an energy system that serves a residence in the United States. The U.S. Department of Energy requires that fuel cell systems must be at least 0.5 kilowatt in size in order to be eligible. For solar water heating, at least half of the dwelling's water must be heated from solar, and the equipment must be certified by the Solar Rating and Certification Corporation or a comparable entity. Federal Energy Star criteria must be met by geothermal heat pumps for them to be eligible.

Solar water heating, solar electric power and fuel cell systems must have been put in place after January 1, 2006 in order to be eligible for the tax credit based on the Energy Policy Act of 2005, in effect as of 2015. This act was amended to allow wind energy and geothermal heat pumps to be eligible after 2008, states Energy.gov.

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