Residential Tax Credit

The Internal Revenue Code was recently amended to add a tax credit for the installation of qualifying alternative energy improvements made to a home between January 1, 2006 and December 31, 2007. The credit is equal to 30% of the cost of qualifying solar photovoltaic and solar water heating equipment. Qualifying expenditures include labor and equipment. The maximum annual credit is $2,000 for photovoltaic and $2,000 for solar water heating.

In order for the photovoltaic or solar water heating equipment to qualify for the credit, they must be certified by the nonprofit Solar Rating and Certification Corporation or a comparable entity endorsed by the state in which the property is installed. The credit is a $1 for $1 reduction in tax and is available regardless of income or net worth.