Residential Energy Efficient Property

Nonbusiness Energy Property Credit (Form 5695)

  1. Residential Energy Efficient Property Credit (§25D). This tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment, wind turbines installed on or in connection with their home located in the United States, and geothermal heat pumps installed on or in connection with their main home located in the United States. The credit, which runs through 2019, is 30% of the cost of qualified property, regardless of amount, with a phase-out from 2020 through 2022. American Recovery and Reinvestment Act (ARRA) removes some of the previously imposed annual maximum dollar limits.

  2. Plug-in Electric Drive Vehicle Credit (§30D). ARRA modifies this credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity. ARRA phases out the credit for each manufacturer after it sells 200,000 vehicles.
    Some States (MD and CO) and Cities also offer tax credits.  On the other hand, some states (GA, ID, NE and VA) are now imposing fees of electric and hybrid automobiles that have been escaping payment of the highway use tax that is charged with the purchase of fuel.

  3. Nonbusiness energy property credit expired Dec. 31, 2014 (§25C). American Taxpayer Relief Act (ATRA) extended the nonbusiness energy property credit through 2014. The $500 lifetime and other credit limitations did not change.

Non-Business Energy Property Credit 

  • Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs.
  • The other part of the credit is not a percentage of the cost. It is for the actual cost of certain property. This may include items like water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit.
  • This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.
  • Your main home must be located in the U.S. to qualify for the credit.
  • Be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product’s packaging. You can rely on it to claim the credit, but do not attach it to your return. Keep it with your tax records.
  • You may claim the credit on your 2015 tax return if you didn’t reach the lifetime limit in past years. Under current law, this credit is available through Dec. 31, 2016.

Residential Energy Efficient Property Credit

  • This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home.
  • Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property
  • There is no dollar limit on the credit for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
  • The home must be in the U.S. It does not have to be your main home, unless the alternative energy equipment is qualified fuel cell property.
  • This credit is available through 2016.