Energy Efficiency Tax Credits from the Stimulus Package

  • Published on March 4th, 2009

President Obama’s stimulus package changed the rules on tax credits for energy efficiency. These changes should make investing in energy efficiency a no-brainer for small businesses and homeowners.

Obama’s focus on reducing carbon emissions, investment in clean energy and creating green jobs to boost economic growth is clear.  As a result of the package:

  • energy efficiency tax credits have been raised from 10% of cost to 30%;
  • the maximum tax credit has been raised from $500 to $1500 on individual efficiency upgrades;
  • more expensive upgrades, such as solar panels, solar water heaters, and geothermal pumps are not limited to their previous $1,500 maximum, and;
  • the $200 tax credit cap on efficient windows has been removed (however, the standards are also more stringent).

All of this means that there has never been a better time, financially, to upgrade, insulate, and/or weatherize your buildings. These investments should pay for themselves relatively quickly, given the incentives and the energy savings, and provide long term savings in addition to good PR for your company.

For example, Jiminy Peak, a small ski resort in Massachusetts, put in a wind turbine at their resort. With an up-front cost of roughly $4M and energy savings of $450,000 per year, the turbine will pay for itself in less than ten years and provide reliable electricity for many years after. Jiminy Peak has protected itself from fluctuations in energy costs and power outages, and meanwhile given itself a nice PR victory.

The Small Business Association also has a guaranteed loan program for construction and renovation including Energy Star appliances and upgrades. The 7a Loan Guaranty Program has a high degree of flexibility in what you are able to use the money for, including energy efficiency, retrofitting, and new Energy Star upgrades.

>>See also: Obama First to Enforce 34-Year-Old Energy Efficiency Rules

Scott Cooney is the author of Build a Green Small Business:  Profitable Ways to Become an Ecopreneur (McGraw-Hill), and hopes that the green economy will someday just be referred to as…the economy.

Photo credit:  BrentDanley on Flickr Creative Commons





About the Author

Scott Cooney (twitter: scottcooney) is an adjunct professor of Sustainability in the MBA program at the University of Hawai'i, green business startup coach, author of Build a Green Small Business: Profitable Ways to Become an Ecopreneur (McGraw-Hill), and developer of the sustainability board game GBO Hawai'i. Scott has started, grown and sold two mission-driven businesses, failed miserably at a third, and is currently in his fourth. Scott's current company has three divisions: a sustainability blog network that includes the world's biggest clean energy website and reached over 5 million readers in December 2013 alone; Pono Home, a turnkey and franchiseable green home consulting service that won entrance into the clean tech incubator known as Energy Excelerator; and Cost of Solar, a solar lead generation service to connect interested homeowners and solar contractors. In his spare time, Scott surfs, plays ultimate frisbee and enjoys a good, long bike ride. Find Scott on
  • landlord

    Little landlord here (over one rental house). I have a heatpump at the rental house that is in need of some repairs (as it is now beginning to age out after only 11 yrs…a bit early IMHO).

    Thinking I might be able to utilize an energy tax credit I thought it would be nice to now replace the unit with a high efficiency unit. It would cost me more to replace the unit and I would not directly benefit from the lower operating cost although my tenants could. I however would have a more reliable system and I really like the idea of having a unit that uses the newer more environmentally friendly refrigerant.

    But the tax credit appears to only be available to homeowners as the tax credit is for the taxpayer's primary residence. So since I don't live at my rental unit and I don't really expect that my tenants want to dish out the 6 grand for a new high efficiency system for me…it appears that there is no tax incentive for this situation.

    Am I missing something?

    Most tenants are of lower income or are on a fixed income so a new high efficiency unit could really benefit them.

    So I am back to thinking I should just make another repair. It is riskier for me because I know yet another repair is in the not to distant future. It is more costly for my tenants and less beneficial for the environment.

    I am disappointed. The repair is expected to be $1500. A new high efficiency unit would be $6000. which is a $4500 premium…a $3000 premium would be stretching it a bit for me but I would be willing to go that route if I could.

  • TellTheTruth

    Too bad the energy credits only apply to homeowners making less than $45K/year. Seems like it would be smart to offer everyone a tax break to make their homes more energy efficient.

  • Great summary. Thanks for providing this — always helpful to dig through the details — and should be interesting to see how states line up for a piece of this or to provide additional incentives.