25E: The First Home Performance Based Tax Credit

Posted By DEMILEC || 12-Dec-2011

Demilec USA is supporting the Cut Energy Bills at Home Act and we are pleased to see that the Senate and House are showing bipartisan support. If passed this would be the first residential performance-based tax credit given to homeowners who make energy efficiency improvements. The proposed bill would provide performance-based tax credits of up to $5,000 per project for homeowners who install qualified energy efficiency measures. This tax credit would provide homeowners with an additional incentive to upgrade their homes with spray foam insulation and other energy saving measures. It is in the best interest of Demilec USA, our contractors and homeowners that 25E be passed and we encourage you to sign the petition showing your support at Efficiency First’s Website.

Below you will find a description of 25E as stated on Efficiency First’s Website:

What would the bill do?

This legislation will provide the first performance-based tax credit for people to make whole house energy improvements. The bill would add a new section to the Internal Revenue Code, referred to as “Section 25E: Performance Based Energy Improvements.”

What need is being met by the 25E Tax Credit?

This enhances consumer choice and allows the taxpayer to pursue energy efficiency improvement options that links energy savings to the tax credit amount. Further, this offers policymakers an opportunity to link tax payer funds to actual performance.

How would the 25E Tax Credit be structured?

Individuals who qualify for the 25E Tax Credit would be given a credit for work done in the taxable year, as follows:

Projected Reduction in Heating, Cooling and Hot Water energy use: Maximum 25E tex credit
At least 20% $2000
25% $2500
30% $3000
35% $3500
40% $4000
45% $4500
50% $5000

The tax credit would be capped at 30% of the total job cost for the installed measures.

How would energy use reduction be calculated?

A contractor will establish baseline energy us of the home by using BPI-2400-S-2011 or an equivalent standard. They would then provided estimated energy savings by modeling the retrofit using software certified by RESNET, or other software approved by the Secretary.

Which companies would qualify to do work?

In order for their customers to qualify for the tax credit, companies would need to be either:

● A BPI accredited company

● A RESNET certified Energy Smart Home Performance Team

● A company accredited by an equivalent certification program approved by the Secretary.

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