Stimulus Offers Tax Credit For Energy Efficiency

Need new windows or a heat pump? As part of the federal stimulus package, Uncle Sam is offering tax credits of up to $1,500 for homeowners who make energy efficient home improvements. And if you're installing solar panels the credits are even bigger.

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RENEE MONTAGNE, host:

This is MORNING EDITION from NPR News. I'm Renee Montagne.

STEVE INSKEEP, host:

And I'm Steve Inskeep.

We're going to talk next about the connection between home improvements and the economy, not to mention the environment. The Obama administration is hoping that energy efficient home improvements and other environmental projects will create more jobs. And in a moment we'll talk with the president's special advisor on green jobs.

The administration hopes that home owners gain, too. As part of the federal stimulus package, homeowners get sizable tax credits for making energy efficient improvements. And we have more this morning from NPR's Wendy Kaufman.

(Soundbite of hammering)

WENDY KAUFMAN: After three days of measuring and cutting and hammering, Brian Butz's window installation crew is just about finished with this project.

Mr. BRIAN BUTZ (Einar Johanson Insulation & Glass): This is Jeff over here. Jeff Brouder(ph), he's the lead installer. This is his son Josh. And Bonnie is back there. She's the homeowner. And my name's Brian with Einar Johanson Insulation & Glass.

(Soundbite of sawing)

KAUFMAN: Bonnie Regaline(ph) is getting new windows. She's lived in this suburban Seattle rambler since the house was new back in 1969. The original single pane windows were cold and drafty.

Ms. BONNIE REGALINE (Homeowner): We're replacing all the windows that were aluminum windows into double pane vinyl windows. And I've noticed a big difference already.

KAUFMAN: She says the house is warmer and she's no longer bothered by the sound of traffic.

Ms. REGALINE: You can hardly hear it inside now, where before it was quite loud.

KAUFMAN: Silence is golden. But from a public policy point of view the biggest benefit is that her home will consume less energy, and as part of the federal stimulus package homeowners like Regaline can get a break on their federal taxes.

Ms. REGALINE: Well, it is a nice thing, you know. Maybe it spurred us on to do it sooner rather than wait.

KAUFMAN: In general, she and other consumers are eligible for tax credits of up to $1,500 for certain energy efficient home improvements made in 2009 and 2010. The amount is equal to 30 percent of the cost of materials. Things such as insulation, furnaces, patio doors and windows are covered.

Ms. REGALINE: It's not an inexpensive repair to your house. So you really have to be thinking about the most economical way to go. And that seems like if you get money back that's really good for your, you know, for your bottom-line.

KAUFMAN: If you install solar panels or certain other big ticket items, the tax credit extends for several years and is not capped.

For homeowner Regaline, the savings don't stop with a federal tax credit. She can get a $1,000 rebate from her local public utility, Puget Sound Energy. Cal Shirley is a company vice president.

Mr. CAL SHIRLEY (Vice president, Puget Sound Energy): We provide rebates and we provide grants, because it's cheaper for us to provide that, for them to buy energy efficient equipment, as opposed to us to go out and buy or build new generation.

KAUFMAN; In other words, if consumers and businesses use less energy the utility won't need as many new power plants.

Puget Sound Energy is offering big rebates on items such as insulation and more modest ones on things like lighting fixtures, water heaters and washing machines. Puget Sound Energy is not alone in offering cash back. Utility companies across the country are offering a variety of financial incentives in addition to those being offered by Uncle Sam.

Wendy Kaufman, NPR News, Seattle.

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