UNITED STATES CODE
TITLE 26.
INTERNAL REVENUE CODE
SUBTITLE A. INCOME TAXES
CHAPTER 1. NORMAL TAXES AND SURTAXES
SUBCHAPTER A. DETERMINATION OF TAX LIABILITY
PART IV. CREDITS AGAINST TAX
SUBPART A. NONREFUNDABLE PERSONAL CREDITS
26 USCS § 25C Nonbusiness energy property
(a) Allowance of credit. In the case of an individual, there shall be
allowed as a credit against the tax imposed by this chapter for the taxable
year an amount equal to the sum of--
(1) 10 percent of the amount paid or incurred by the taxpayer
for qualified energy efficiency improvements installed during such taxable
year, and
(2) the amount of the residential energy property
expenditures paid or incurred by the taxpayer during such taxable year.
(b) Limitations.
(1) Lifetime limitation. The credit allowed under this
section with respect to any taxpayer for any taxable year shall not exceed the
excess (if any) of $ 500 over the aggregate credits allowed under this section
with respect to such taxpayer for all prior taxable years.
(2) Windows. In the case of amounts paid or incurred for
components described in subsection (c)(2)(B) by any
taxpayer for any taxable year, the credit allowed under this section with
respect to such amounts for such year shall not exceed the excess (if any) of $
200 over the aggregate credits allowed under this section with respect to such
amounts for all prior taxable years.
(3) Limitation on residential energy property expenditures.
The amount of the credit allowed under this section by reason of subsection (a)(2) shall not exceed--
(A) $ 50 for any advanced main air circulating
fan,
(B) $ 150 for any qualified natural gas,
propane, or oil furnace or hot water boiler, and
(C) $ 300 for any item of energy-efficient
building property.
(c) Qualified energy efficiency improvements. For purposes of this section--
(1) In general. The term
"qualified energy efficiency improvements" means any energy efficient
building envelope component which meets the prescriptive criteria for such
component established by the 2000 International Energy Conservation Code, as
such Code (including supplements) is in effect on the date of the enactment of
this section (or, in the case of a metal roof with appropriate pigmented
coatings which meet the Energy Star program requirements), if--
(A) such component is installed in or on a
dwelling unit located in the United States and owned and used by the taxpayer
as the taxpayer's principal residence (within the meaning of section 121),
(B) the original use of such component commences
with the taxpayer, and
(C) such component reasonably can be expected to
remain in use for at least 5 years.
(2) Building envelope component. The term "building
envelope component" means--
(A) any insulation material or system which is
specifically and primarily designed to reduce the heat loss or gain of a
dwelling unit when installed in or on such dwelling unit,
(B) exterior windows (including skylights),
(C) exterior doors, and
(D) any metal roof installed on a dwelling unit,
but only if such roof has appropriate pigmented coatings which are specifically
and primarily designed to reduce the heat gain of such dwelling unit.
(3) Manufactured homes included. The term "dwelling
unit" includes a manufactured home which conforms to Federal Manufactured
Home Construction and Safety Standards (section 3280 of title 24, Code of
Federal Regulations).
(d) Residential energy property expenditures. For purposes of this section--
(1) In general. The term
"residential energy property expenditures" means expenditures made by
the taxpayer for qualified energy property which is--
(A) installed on or in connection with a
dwelling unit located in the United States and owned and used by the taxpayer
as the taxpayer's principal residence (within the meaning of section 121), and
(B) originally placed in service by the
taxpayer.
Such term includes expenditures for labor costs properly
allocable to the onsite preparation, assembly, or original installation of the
property.
(2) Qualified energy property.
(A) In general. The term "qualified energy
property" means--
(i)
energy-efficient building property,
(ii) a qualified natural
gas, propane, or oil furnace or hot water boiler, or
(iii) an advanced main
air circulating fan.
(B) Performance and quality standards. Property
described under subparagraph (A) shall meet the performance and quality
standards, and the certification requirements (if any), which--
(i)
have been prescribed by the Secretary by regulations (after consultation with
the Secretary of Energy or the Administrator of the Environmental Protection
Agency, as appropriate), and
(ii) are in effect at the
time of the acquisition of the property, or at the time of the completion of
the construction, reconstruction, or erection of the property, as the case may
be.
(C) Requirements for standards. The standards
and requirements prescribed by the Secretary under subparagraph (B)--
(i)
in the case of the energy efficiency ratio (EER) for central air conditioners
and electric heat pumps--
(I) shall
require measurements to be based on published data which is tested by
manufacturers at 95 degrees Fahrenheit, and
(II) may be
based on the certified data of the Air Conditioning and Refrigeration Institute
that are prepared in partnership with the Consortium for Energy Efficiency, and
(ii) in the case of
geothermal heat pumps--
(I) shall be
based on testing under the conditions of ARI/ISO Standard 13256-1 for Water
Source Heat Pumps or ARI 870 for Direct Expansion GeoExchange
Heat Pumps (DX), as appropriate, and
(II) shall
include evidence that water heating services have been provided through a desuperheater or integrated water heating system connected
to the storage water heater tank.
(3) Energy-efficient building property. The term
"energy-efficient building property" means--
(A) an electric heat pump water heater which
yields an energy factor of at least 2.0 in the standard Department of Energy
test procedure,
(B) an electric heat pump which has a heating
seasonal performance factor (HSPF) of at least 9, a seasonal energy efficiency
ratio (SEER) of at least 15, and an energy efficiency ratio (EER) of at least
13,
(C) a geothermal heat pump which--
(i)
in the case of a closed loop product, has an energy efficiency ratio (EER) of
at least 14.1 and a heating coefficient of performance (COP) of at least 3.3,
(ii) in the case of an
open loop product, has an energy efficiency ratio (EER) of at least 16.2 and a
heating coefficient of performance (COP) of at least 3.6, and
(iii) in the case of a
direct expansion (DX) product, has an energy efficiency ratio (EER) of at least
15 and a heating coefficient of performance (COP) of at least 3.5,
(D) a central air conditioner which achieves the
highest efficiency tier established by the Consortium for Energy Efficiency, as
in effect on January 1, 2006, and
(E) a natural gas, propane, or oil water heater
which has an energy factor of at least 0.80.
(4) Qualified natural gas, propane, or oil furnace or hot
water boiler. The term "qualified natural gas, propane, or oil furnace or
hot water boiler" means a natural gas, propane, or oil furnace or hot
water boiler which achieves an annual fuel utilization efficiency rate of not
less than 95.
(5) Advanced main air circulating fan. The term
"advanced main air circulating fan" means a fan used in a natural
gas, propane, or oil furnace and which has an annual electricity use of no more
than 2 percent of the total annual energy use of the furnace (as determined in
the standard Department of Energy test procedures).
(e) Special rules. For purposes of this section--
(1) Application of rules. Rules similar to the rules
under paragraphs (4), (5), (6), (7), (8), and (9) of section 25D(e)
shall apply.
(2) Joint ownership of energy items.
(A) In general. Any expenditure otherwise
qualifying as an expenditure under this section shall
not be treated as failing to so qualify merely because such expenditure was
made with respect to two or more dwelling units.
(B) Limits applied separately. In the case of
any expenditure described in subparagraph (A), the amount of the credit
allowable under subsection (a) shall (subject to paragraph (1)) be computed
separately with respect to the amount of the expenditure made for each dwelling
unit.
(f) Basis adjustments. For purposes of this subtitle, if a credit is allowed
under this section for any expenditure with respect to any property, the
increase in the basis of such property which would (but for this subsection)
result from such expenditure shall be reduced by the amount of the credit so
allowed.
(g) Termination. This section shall not apply with respect to any property
placed in service after December 31, 2007.