Energy Star Windows Can Earn Tax Credits

By Arlene Stewart

First, credit where credit is due. The information provided in this article came primarily from Harry Misuriello, Director of Utilities and Buildings, for the Alliance to Save Energy.

Now, the important news: the Internal Revenue Service has published its Guidance Notices for tax credits for existing residential, new homes and manufactured housing. The IRS has provided a “special rule” (on page 7 of the IRS notice 2006-26) for claiming the residential tax credits with Energy Star, as follows:

.03 Special Rule for ENERGY STAR Windows and Skylights. A taxpayer may treat an exterior window or skylight that bears an ENERGY STAR label and is installed in the region identified on the label as an Eligible Building Envelope Component and may rely on such ENERGY STAR label, rather than on a manufacturer’s certification  statement, in claiming the § 25C credit.

In a detailed analysis of 3,111 US counties, Alliance to Save Energy and Efficient Windows Collaborative showed the IRS and the US Department of Energy that the ENERGY STAR label met or exceeded the IECC code criteria in all but a small number of counties.  They recommended that regional ENERGY STAR window labels be the qualifying criteria for the windows tax credits. 

This recommendation was based on: 1) the large public awareness of the ENERGY STAR labeling program, 2) the significant investment the taxpayers have made in promoting the ENERGY STAR brand and 3) the simple and effective messaging that would result for promoting energy efficient windows to achieve the energy savings intended by Congress.  Use of the ENERGY STAR label for the tax credits will simplify compliance, minimize confusion in the marketplace and reduce transaction and recordkeeping burdens to consumers and manufacturers alike.
 
This Alliance/EWC report, “The Tax Credit for the Installation of Energy Efficient Windows: Does the ENERGY STAR Help Consumers Find Products that Qualify,” has been publicly available on the Tax Incentives Assistance Project (TIAP) web site at: http://www.energytaxincentives.org/tiap-recommendations-implementation.html .  Copies are available for downloading.
 
More information on the new IRS tax credit guidance for existing homes, new homes and new manufactured housing can be found on the TIAP web site at  www.energytaxincentives.org and at the Alliance web site at www.ase.org.

Arlene Zavocki Stewart is nationally known energy advocate, promoting the use of state-of-the-art window and glazing technologies to construct high performance homes and buildings. She is also FHBA’s Area II Vice President for 2006. The Alliance to Save Energy is a coalition of prominent business, government, environmental, and consumer leaders who promote the efficient and clean use of energy worldwide to benefit consumers, the environment, the economy, and national security. The Efficient Windows Collaborative, a project of the Alliance to Save Energy and supported the US Department of Energy, promotes energy performance rating and labeling among window manufacturers while educating builders, homeowners, and consumers about the benefits of energy-efficient windows.

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