Tankless Water Heater Tax Credit
Since tax season is upon us, I thought I would remind you that the The Energy Policy Act of 2005 (EPACT) gives homeowners federal tax credits for purchasing energy-efficient appliances through December 31st, 2007. And it’s not a deduction, it’s a dollar-for-dollar tax credit, up to $500, that directly reduces the tax amount you pay to the government.
Improvements must be installed in or on the taxpayer’s principal residence in the United States. Home improvement tax credits apply for improvements made between January 1, 2006 and December 31, 2007.
— US Department of Energy
For example, if you spend $750 to purchase and install a tankless water heater in your home, you can deduct the full tax credit amount of $500 from your federal tax bill. In essense, you would be upgrading the comfort of your home with an energy efficient water heater for just $250. The more efficient water heater will continue to save you money going forward, so you will most likely make up the additional $250 in the months following the installation. Looking at it this way, the new water heater really wouldn’t cost you much of anything. Sounds like a good investment to me, instant hot water for basically no additional cost.
For more information about the tax credit, visit the US Department of Energy website.