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Take advantage of Federal Stimulus Tax Credits
Author: Marv Shidler
Last updated: August 9, 2009
The newly instated federal tax credits (American Recovery and Reinvestment Act of 2009 signed into law February 17, 2009) for residential energy efficiency make 2009 the perfect time for homeowners to evaluate their home. Upgrading to more energy efficient windows, exterior doors, or insulation could result in $1500 of savings. The credit is based on 30% of the product cost up to $1500 as long as the product meets the required energy standards. Refer to the chart on the left, based on information from EnergyStar, for product specifications.
According to EnergyStar, adequate insulation and proper air sealing and caulking can save up to 20% on utility bills. Coupling this savings with the tax credit makes these home improvements a valuable investment.
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Consumers can itemize purchases on their federal income tax form, which will lower the total amount of tax they owe the government.