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Economic
Stimulus Package Revealed
Save energy and money through efficiency upgrades
May/June 2009
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Our country has experienced very trying economic times, leaving many Americans searching for ways to cut costs. Fortunately, the new economic stimulus package gives homeowners the chance to do just that.
On February 17, President Obama signed a federal stimulus bill that will pump $787 billion into a hurting American economy, with significant funding for energy efficiency and weatherization assistance.
The American Recovery and Reinvestment Act
(ARRA) will provide more than $60 billion in energy-related public spending, investments and loan guarantees. The ARRA will also offer $20 billion in tax incentives, credits and bonds.
The Weatherization Assistance Program
The stimulus package provides additional funding for the U.S. Department of Energy’s (DOE) Weatherization Assistance Program, a federally funded program that installs energy-efficient upgrades in eligible homes. The ARRA increases eligibility from 150 percent to 200 percent of the national poverty level. In other words, a family of four can have an annual income of $44,100 and still qualify for the program.
Participants in the Weatherization Assistance Program will receive a professional energy consultation, a blower-door test to locate air leaks, and advice on how to be more energy efficient. Workers will then make energy upgrades, such as insulating walls and roofs, sealing air leaks, and installing more efficient heating and cooling systems. The entire process takes approximately two days. The stimulus bill also increased the amount of money allowed for each home from $2,500 to $6,500.
The DOE has a goal of weatherizing one million homes per year. Priority will be given to the elderly, people with disabilities and households with small children.
Even if you don’t qualify for federal assistance, investing in a few basic measures to secure a home from outside elements can provide major benefits. The DOE says weatherization — the process of sealing air leaks and properly insulating a home — can reduce heating bills by up to 32 percent, resulting in an average energy savings of $358 per year. Most air leaks are hidden in attics and basements and can significantly raise energy bills if not sealed. Other areas to check include windows and doors, wiring holes, plumbing vents, recessed lights and furnace flues. Sealing these common areas with caulk, weather stripping or other appropriate materials will make your home much more energy efficient.
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Tax credits for homeowners
Those not eligible for federally funded programs can receive tax credits up to $1,500, or 30 percent, of the cost for new energy upgrades to their homes. Efficiency tax credits were already available for 2009, but carried a $500 limit and only covered up to 10 percent of investment.
Energy efficient upgrades include weatherization activities, as well as the installation of efficient heating, ventilation and air conditioning systems — which account for between 40 and 60 percent of a home’s energy usage. Consumers who replace old systems with more efficient ENERGY STAR-qualified systems can claim up to 30 percent of the cost on next year’s taxes.
Other eligible upgrades include:
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Added insulation to walls and ceilings;
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Energy-efficient windows and doors;
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Window film that has been certified by the manufacturer that it meets the requirements of a qualifying insulation system;
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Pigmented metal roofs or an asphalt roof with cooling granules that meets ENERGY STAR requirements;
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High-efficiency central air conditioning units, including air-source heat pumps;
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High-efficiency fans for heating and cooling systems;
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High-efficiency water heaters, including heat pump water heaters;
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New ground-source or geothermal heat pumps, and
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New biomass stoves.
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“You may have looked at the tax credit in the past and thought it wasn’t worth it,” said Aaron Bradshaw, Vice President of Member Services and Marketing. “This change effectively triples the amount of financial investment you get credit for, and, coupled with how much you can save on energy costs each year, it makes these efficiency measures much more affordable.”
Consumers who opt to make energy-efficient upgrades to their homes should keep their receipts so they can receive the appropriate tax credits.
Tax credits directly lower a member’s federal income taxes, and are generally more valuable than tax deductions because they reduce taxes owed dollar-for-dollar. In contrast, a tax deduction, like a home mortgage or charitable gift, lowers taxable income and may only offer small savings.
For example, a $1,500 tax deduction for someone in the 25 percent tax bracket would lower taxes owed by $350; a $1,500 tax credit for energy efficiency efforts will lower taxes owed by $1,500.
The credits are only available for existing homes and only apply to the cost of materials. Labor is not included. All upgrades must be made between Jan.1, 2009, and Dec. 31, 2010.
Who to Contact
To learn more about energy efficiency measures supported by the stimulus package, visit
http://www.energy.gov/florida.htm. Weatherization programs will be handled differently in each state. In Florida, eligible members should contact Florida Energy & Climate Commission to apply for weatherization assistance.
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Florida:
Florida Energy & Climate Commission
Executive Office of the Governor
600 South Calhoun Street, Suite 251
Tallahassee, Florida 32399-1300
Phone: (850) 487-3800
Fax: (850) 922-9701
Energy@eog.myflorida.com
http://www.myfloridaclimate.com/env/home/climate_quick_links/florida_energy_climate_commission
http://www.energy.gov/florida.htm
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