Current federal tax credits allow consumers to receive a refund of up to $2000 or 30% for their solar hot water or solar photovoltaics (electricity generation) installations until the end of 2007. Below are summaries of some of the federal and Oklahoma tax programs that exist. For additional information such as commerical tax incentives and tax programs for residential customers in states outside Oklahoma, go to the Database of State Incentives for Renewables & Efficiency (DSIRE) website.


Federal Hot Water and Photovoltaics Tax Credit

Incentive Type: Personal Tax Credit Eligible Renewable/Other Technologies: Solar Water Heat and Photovoltaics Applicable Sectors: Residential Amount: 30% Maximum Incentive: $2,000 for photovoltaics and solar water heating; $500 per 0.5 kW for fuel cells Carryover Provisions: Excess credit may be carried forward to succeeding tax year. Eligible System Size: Not specified Equipment/Installation Requirements: Solar water heating property must be certified by SRCC or by comparable entity endorsed by the state. At least half the energy used to heat the dwelling's water must be from solar in order for the solar water heating property expenditures to be eligible. Authority 1: 26 USC § 25D (2005) Date Enacted: 8/8/2005 Effective Date: 1/1/2006 Expiration Date: 12/31/2007

Summary:   The Energy Policy Act of 2005 (H.R. 6, Sec. 1335) establishes a 30% tax credit up to $2,000 for the purchase and installation of residential photovoltaic (solar electric) and solar water heating property. An individual can take both a 30% credit up to the $2,000 cap for a photovoltaics system and a 30% credit up to a separate $2,000 cap for a solar water heating system. A 30% tax credit up to $500 per 0.5 kW is also available for fuels cells.     Solar water heating property must be certified for performance by the Solar Rating Certification Corporation or a comparable entity endorsed by the government of the State in which the property is installed. Note that the tax credit does not apply to solar water heating property for swimming pools or hot tubs.     The credit is calculated based on the individual’s expenditures excluding subsidized energy financing, which is defined as "financing provided under a Federal, State, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy." Consumers who receive other incentives are advised to consult with a tax professional regarding how to calculate this federal tax credit.     If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. Expenditures include labor costs for the onsite preparation, assembly, or original installation of the system and for piping or wiring to interconnect the system to the dwelling.     To be eligible for the credit, a system must be "placed in service" or activated between January 1, 2006, and December 31, 2007. Expenditures with respect to the equipment are treated as made when the installation is completed. This provision is particularly important for expenditures made before 2006 for projects not "placed in service" until 2006. If the installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner. The IRS will be issuing further guidance on claiming this credit.

Federal Energy Efficiency Tax Credit

Incentive Type: Personal Tax Credit Eligible Efficiency Technologies: Water Heaters,Furnaces,Boilers,Heat pumps,Air conditioners,Building Insulation,Windows,Doors,Roofs,Circulating fan used in a qualifying furnace Eligible Renewable/Other Technologies: Geothermal Heat Pumps Applicable Sectors: Residential Amount: 10% of cost of building envelope improvements; 100% for qualified energy property (heating, cooling, water heaters) Maximum Incentive: Varies by technology; no more than $500 credit for all energy property and envelope improvements for all tax years. Equipment/Installation Requirements: Equipment must be new and in compliance with all applicable performance and safety standards; performance and quality standards vary by technology Website: http://www.irs.gov/ newsroom/article/0,,id=154657,00.html Authority 1: 26 USC § 25C Date Enacted: 8/8/2005 Effective Date: 1/1/2006 Expiration Date: 12/31/2007

Summary:   The Energy Policy Act of 2005 established tax credits for energy efficiency improvements in the building envelope of existing homes and for the purchase of high-efficiency heating, cooling, and water heating equipment. These improvements and/or equipment must be placed in service from January 1, 2006 through December 31, 2007 and must serve a dwelling in the United States owned and used by the tax payer as a primary residence. The maximum amount of homeowner credit for all improvements combined is $500 during the two year period of the tax credit.     Building Envelope Improvements   Owners of existing homes can receive tax credits of up to 10% of the cost of upgrading the efficiency of the building's envelope. Components eligible for the credit include: insulation materials and systems designed to reduce a home's heat loss or gain;   exterior doors and windows (including skylights); and   pigmented metal roofs designed to reduce heat gain. Credits for windows are not to exceed $200, and the total amount of credits for building envelope measures and other qualified energy property outlined below must not exceed $500.     Improvements should be expected to remain in use for at least 5 years. Roofs with pigmented coatings must meet Energy Star requirements, and all other improvements must meet 2000 International Energy Conservation Code criteria, including supplements. Manufactured homes conforming to Federal Manufactured Home Construction and Safety Standards also qualify.     Heating, Cooling, and Water Heating Equipment   Purchasers of qualified energy efficient property are eligible for tax credits up to the total expenditures on such property. The credit can also be applied to labor costs for assembly and original installation of this property. Eligible property and maximum credit amounts are as follows: electric heat pump water heaters [$300];   electric heat pumps [$300];   geothermal heat pumps [$300];   central air conditioners [$300];   natural gas, propane, or oil water heaters [$300];   natural gas, propane, or oil furnace or hot water boilers [$150]; and   advanced main air circulating fans [$50]. Performance and quality standards for tax credit eligibility vary by technology. See 26 USC § 25C above for details. In addition, the Internal Revenue Service (IRS) has provided the following interim guidance, pending the issuance of regulations, relating to the credit: IRS Notice 2006-26

Oklahoma Energy Efficient Residential Construction Tax Credit (for contractors and home builders)

Incentive Type: Personal Tax Credit Eligible Efficiency Technologies: Furnaces,Heat pumps,Air conditioners,Caulking/Weather-stripping,Duct/Air sealing,Building Insulation,Windows,Doors,Roofs,Comprehensive Measures/Whole Building Applicable Sectors: Construction, Installer/Contractor Amount: Amount of eligible expenditures Maximum Incentive: $4,000 Carryover Provisions: Can carry over unused credit for up to four years Equipment/Installation Requirements: Property must be less than 2,000 square feet. Website: http://staging.okcommerce.gov/ test1/dmdocuments/SB_610.pdf Authority 1: Oklahoma SB 610 Date Enacted: June 8, 2005 Effective Date: November 1, 2005

Summary:   Oklahoma allows a contractor who is the primary builder of an energy efficient home or manufactured home substantially completed after December 31, 2005 to claim an income tax credit beginning in tax year 2006. The home must be under 2,000 square feet. Improvements eligible for the credit include energy efficient heating and cooling systems, windows, doors, roofs and insulation to minimize heat loss and gain.     The contractor can take a tax credit for the amount of the eligible expenditures, not to exceed $2,000 for a home that is between 20% and 39% above the International Energy Conservation Code 2003 or $4,000 for a home that is 40% or above of the Code. In addition, the heating and cooling efficiencies must meet the minimum requirements established by the National Appliance Energy Conservation Act of 1987 and building envelope improvements must account for a certain percentage of the reduced annual heating and cooling energy consumption levels.     The contractor can carryover any unused portion of the tax credit for up to four subsequent years.