This page lists guidelines for select, energy-efficient home improvements that can earn homeowners up to $500 in federal income tax credits for 2006 and 2007. These credits are part of the federal Energy Policy Act of 2005.

Be aware that these tax credits are offered for higher-priced products and home improvements that provide superior levels of energy efficiency. However, even if you decide not to make a home improvement that is eligible for a tax credit, you will still save a lot of money on energy costs by making your home more energy efficient. That's true for everything from adding insulation to replacing an inefficient heating system.

Energy efficiency requirements
Maximum credit
Exterior windows
windows with
Energy Star label qualify
includes skylights and storm windows
virtually all doors with Energy Star label qualify
storm doors that meet specific conditions qualify
metal roofs with Energy Star label qualify
two-year warranty required
only materials whose primary purpose is to insulate qualify
exterior siding not eligible
Cooling systems
only systems that meet requirements for peak cooling efficiency and, for heat pumps, heating efficiency
minimum AFUE of 95%*
additional $50 credit
for furnaces with
high-efficiency fan
Hot water boilers
minimum AFUE of 95%*

minimum EF of 0.8 for oil and gas systems,
2 for electric units*
* SEER = Seasonal Energy Efficiency Ratio; AFUE = Annual Fuel Utilization Efficiency; EF = Energy Factor
For informational purposes only. Forms and guidelines available through the Internal Revenue Service. The maximum amount of homeowner credit for all improvements combined is $500 during a two-year period. Tax credits apply to improvements made from Jan. 1, 2006 through Dec. 31, 2007. Consultation with a tax professional is recommended.
Sources: Energy Star, American Council for an Energy-Efficient Economy.