If you can come up with the cash, make energy-efficient home improvements now to receive savings from both tax credits and lower energy bills.

Thanks to recent stimulus package changes, you may be eligible for federal tax credits, which are generally more valuable than tax deductions. A tax deduction lowers your taxable income based on your tax bracket, while a tax credit gives you 100% of the credit back and is not income based.

Here's an example: If you are in the 35% tax bracket, a $1,000 deduction reduces your tax bill by $350, but a $1,000 tax credit reduces it by the full $1,000. Claim the credit on your federal income tax form.

Tax credits are available for 30% of the cost of these energy-efficient home improvements, up to $1,500, through 2010 for existing primary homes only:

• Energy-efficient furnace, air conditioner, heat pump, or boiler;
• Insulation;
• Skylights and storm windows and doors;
• Non-solar water heater;
• Roofs (metal and asphalt); and
• Biomass stoves.

Tax credits are available for up to 30% of the cost of these energy-efficient improvements, with no maximum dollar amount, through 2016 for existing primary homes, new home construction, rentals, and secondary homes:

• Geothermal (ground-source) heat pump;
• Solar panels;
• Solar water heater; and
• Small wind energy system.

Don't have the cash available? Check with LifeWay Credit Union for a great deal on a home equity loan!

source - cuna.org