HVAC Tax Credits Scaled Back, But Very Important for 2011!

The extension of the Section 25C Tax Credits are a done deal, and while much smaller for 2011, when combined with utility rebates, they remain a viable force to keep the consumer focused on upgrading to 95% AFUE furnaces and 16/15 SEER (AC/HP) outdoor units for the next calendar year.

Thanks to HARDI for the following summary of the changes;

President Obama signed into law an $858 billion dollar tax relief and benefits package on Friday which includes.

A two year extension of the current tax rates.

An extension of federal unemployment benefits for 13 months.

Setting a two-year Estate Tax at 35% for individual inheritances over $5 million.

A 2% reduction in an employee’s contribution to Social Security. Employer’s contributions to Social Security will remain at current levels.

Also included in the tax bill is a one-year extension of the 25c tax credit, which is returned to pre-stimulus levels. Some specifics of the bill as they relate to 25c.

Eligible taxpayers can claim up to $500 in 2011.

All efficiency levels stay at the current levels, except for natural gas and propane hot water boilers, and oil hot water boilers oil furnaces, which will move to 95% AFUE.

An individual or household lifetime cap of $500, which dates back to January 2006. For example, if an individual has claimed the 25c tax credit since 2006, for any qualifying upgrade up to or over $500, they would be ineligible to claim the credit in 2011.

As of January 1, 2011, the new credit levels will be:

$50 for any advanced main air circulating fano $150 for any qualified natural gas, propane or oil furnace or hot water boiler.o $300 for any item of energy-efficient building property (i.e. Central Air/ Heat Pumps)

$150 for any qualified natural gas, propane or oil furnace or hot water boiler.o $300 for any item of energy-efficient building property (i.e. Central Air/ Heat Pumps)

$300 for any item of energy-efficient building property (i.e. Central Air/ Heat Pumps)

Taxpayers should always consult with their tax professional to determine the applicability of any tax credit to their particular situation. More information is available at both the IRS and DOE websites.