Don’t get in hot water over fuel bills. If you installed an efficient water heater, you might be eligible for a tax credit.
Doing the dishes, taking a shower, or cleaning your clothes — you need hot water and lots of it. The government understood, and offers an energy tax credit for adding a more efficient hot water heater to your home.
Tax credit particulars:
- 10% of expenditures, up to $300, for a non-solar water heater, including installation. (You can spend a lifetime total of 10% of expenditures up to $500 for all approved energy purchases combined. If you already claimed energy tax credits up to this limit, you’re done.)
- Save receipts and labels for Uncle Sam.
- File IRS Form 5695 with your return.
There are many different kinds of hot water heaters, so the Energy Star site is a good bet for info. It’s very specific on what is and is not credit-eligible. For instance, it must have a thermal efficiency of at least 90%. But it can run on gas, oil, or propane.
Don’t rely solely on contractors who may not know the details or who promise their products will get the credit in order to make a sale.
