How it Works

The new stimulus law beefs up the tax credits that are available to you, helping you slash your overall tax bill. Remember that a tax credit reduces your income taxes dollar-for-dollar. Think of it as getting a rebate for part of what you spend to make your home more energy-efficient.

Before Congress changed the law, you could not claim more than a $500 in tax credits for installing energy-efficient products such as windows, furnaces, heat pumps and the like. Many items had individual caps as well, such as a $200 credit limit on windows.

Now you can claim a maximum total energy credit of $1,500 for 2009 and 2010, and the caps on individual items are eliminated. In addition, the old 10 percent credit rate is juiced up to a more robust 30 percent. That means you can reduce your tax bill by 30 percent of what you pay for the following items that meet federal energy-efficiency standards, up to the $1,500 maximum tax savings:

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