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Residential Renewable Energy Tax Credit

Incentive Type	Personal Tax Credit
State	Federal
Eligible Tech.	Solar Water Heat, Photovoltaics, Wind, Fuel Cells, Geothermal Heat Pumps, Other Solar Electric Technologies
Applicable Sectors	Residential
Amount	30%
Max. Incentive	Solar-electric systems placed in service before 1/1/2009: $2,000 Solar-electric systems placed in service after 12/31/2008:no max Solar water heaters placed in service before 1/1/2009: $2,000 Solar water heaters placed in service after 12/31/2008: no max Wind turbines placed in service in 2008: $4,000 Wind turbines placed in service after 12/31/2008: no max Geothermal heat pumps placed in service in 2008: $2,000 Geothermal heat pumps in service after 12/31/2008: no max Fuel cells: $500 per 0.5 kW
Carryover Provisions: Eligible System Size	Excess credit may be carried forward to succeeding tax year Fuel cells: 0.5 kW minimum
Equipment/Installation Requirements	Solar water heating property must be certified by SRCC or by comparable entity endorsed by the state in which the system is installed. At least half the energy used to heat the dwelling's water must be from solar. Geothermal heat pumps must meet federal Energy Star requirements. Fuel cells must have electricity-only generation efficiency greater than 30%.
Authority 1	26 USC § 25D
Date Enacted	8/8/2005 (subsequently amended)
Date Effective	1/1/2006
Expiration Date	12/31/2016
Authority 2	IRS Form 5695 & Instructions: Residential Energy Credits

Summary:
Note: The American Recovery and Reinvestment Act of 2009 does not allow taxpayers eligible for the residential renewable energy tax credit to receive a U.S. Treasury Department grant instead of taking this credit.

Established by the federal Energy Policy Act of 2005, the federal tax credit for residential energy property initially applied to solar-electric systems, solar water heating systems and fuel cells. The Energy Improvement and Extension Act of 2008 (H.R. 1424) extended the tax credit to small wind-energy systems and geothermal heat pumps, effective January 1, 2008. Other key revisions included an eight-year extension of the credit to December 31, 2016, the ability to take the credit against the alternative minimum tax, and the removal of the $2,000 credit limit for solar-electric systems beginning in 2009. The credit was further enhanced in February 2009 by The American Recovery and Reinvestment Act of 2009 (H.R. 1: Div. B, Sec. 1122, p. 46), which removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.

A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for onsite preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The excess credit can be carried forward until 2016, but it is unclear whether the unused tax credit can be carried forward after then. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.

Solar-electric property