Ever since the passage of the Energy Policy Act of 2005 people have been able to take some deductions on their federal taxes if they improved their home’s energy efficiency. Now, one element of that program is set to expire because it wasn’t extended by Congress this year.

As of December 31 the 10% deduction for home improvements like installing Energy Star windows, attic insulation and air sealing products is no longer available. This tax break allows up to a $500 deduction for these energy efficiency improvements.

According to a news release by Johns Manville a homeowner poll showed that 23% of homeowners had taken advantage of the deductions. The research also found that 32% of homeowners thought their homes were energy efficient even though 78% had claimed their heating and cooling costs had increased in 2006.

Johns Manville offered some suggestions for taking advantage of the tax break in the final days.

• The US Department of Energy says that 40% of all air leaks in the average home are in the attic and that by better insulating that space homeowners can get a potential 30% savings on heating and cooling costs.
• Replace old exterior doors or add storm doors to reduce drafts and cut down on heated or cooled air from escaping.
• Replace old furnaces. Old equipment can be drastically lower in efficiency and thereby use more energy to do the same job that new equipment does.
• Install solar energy improvements like solar hot water and photovoltaics for electrical generation. This offers a tax credit of 30% or up to $2000.

If you’d like to assess your home’s energy efficiency the company offers a Home Energy Analysis tool online.

Recent News