'Fiscal cliff' legislation retroactively reinstates the 25C tax credits for highly efficient HVAC and water heating equipment that expired at the end of 2011.



On Jan. 2, President Barack Obama signed legislation designed to avoid the “fiscal cliff.” In addition to its many other tax provisions, the bill retroactively reinstates the 25C tax credits for highly efficient HVAC and water heating equipment that expired at the end of 2011. Because the credits were made retroactive to Jan. 1, 2012, they can be used for qualified equipment that was installed any time after Dec. 31, 2011. Qualified equipment includes :
  • Water heaters ($300 tax credit): Electric heat pump water heaters with an energy factor of at least 2.0; and natural gas, propane, or oil water heaters with an energy factor of at least 0.82 or a thermal efficiency of at least 90%.
  • Boilers ($150 tax credit): Natural gas, propane, or oil boilers with an AFUE of not less than 95.
  • Heat pumps ($300 tax credit): Split system electric heat pumps that achieve the highest efficiency CEE tier as of Jan. 1, 2009 (8.5 HSPF; 12.5 EER; 15 SEER); and packaged electric heat pumps that achieve the highest efficiency CEE tier as of Jan. 1, 2009 (8.0 HSPF; 12.0 EER; 14 SEER).
Click here for more information from the Air-Conditioning, Heating and Refrigeration Institute on furnace and air-conditioner tax credits.

Another section of that legislation benefits the geothermal industry. According to the Geothermal Energy Association, the modification adopted in the law, which allows projects to qualify for the production tax credit based upon being under construction, represents an approach to renewable tax incentives that will work more effectively for geothermal and other renewable power technologies that have longer development lead times.