Energy Star Label Qualifies Some Products For Now

April 29, 2009

Windows and skylights meeting Energy Star requirements are currently eligible for energy efficient tax credits established unter the American Recovery and Reinvestment Act, according to an April 22  Internal Revenue Service press release.  That eligibility, which would mean these products would not have to have a U-factor of less than .30 and a SHGC of less than .30 to qualify, is scheduled to end June 1, or "until guidance is released."

The Energy Star Web page summarizing federal tax credits for energy efficient products was updated to reflect the IRS ruling. Under "Tax Credit Specification" for exterior windows and skylights, it now states, "*Important Change: Before June 1, 2009: must meet Energy Star criteria. After June 1, 2009:
U factor <= 0.30, SHGC <= 0.30."

The Department of Energy has also issued a letter to Energy Star stakeholders with a more detailed explanation of the IRS ruling.  "The 'Safe Harbor' provision allows the performance terms of the previous window, door, and skylight tax credit to carry over until June 1, 2009," writes Richard Karney, DOE's Energy Star program manager. "Under the old tax credit, windows, doors, and skylights had to meet or exceed the prescriptive criteria established by the 2001 Supplement of the 2000 International Energy Conservation Code (IECC) or the 2004 Supplement of the 2003 IECC for the climate zone in which the product is installed. Either Energy Star labels or manufacturer certification statements were required to document these requirements for windows and skylights; doors were required to have a manufacturer certification statement. These performance terms and certification requirements will continue until June 1, 2009. The monetary terms of the current tax credit still apply to all window, door, and skylight purchases made in 2009 and 2010."

Karney's letter goes on to emphasize that this ruling is not a change in the tax law. "As of June 1, all products must meet the U-factor and Solar Heat Gain Coefficient (SHGC) maxima of 0.30. Please note that this is not the revised guidance document, which constitutes the final word from the IRS on how the tax credit will be implemented. The IRS plans to issue the revised guidance document later this spring," he continues. "Energy Star will send out another announcement when this document is available."

Headlined "Energy-Saving Steps This Year May Result in Tax Savings Next Year," the April 22 IRS release says,  "homeowners generally may continue to rely on manufacturers’ certifications that were provided under the old guidance. For exterior windows and skylights, homeowners may continue to rely on Energy Star labels in determining whether property purchased before June 1, 2009, qualifies for the credit." 

Acknowledging the stricter 30/30 requirements for tax credits written into ARRA, the IRS notes, "Homeowners should be aware that the standards in the new law are higher than the standards for the credit that was available in 2007 for products that qualify as 'energy efficient' for purposes of this tax credit. The IRS will issue guidance that will allow manufacturers to certify that their products meet these new standards."

A number of window manufacturers had become aware of the IRS statement and had started notifying customers that Energy Star labeled products would qualify for the tax credit, even if they didn't meet the 30/30 requirements. Window & Door confirmed with knowledgeable sources that such an interpretation is correct, based on what IRS officials are saying now.  Those same sources also offered some caveats.  First, the June 1 date could change once the "official guidance" is released, and second, the interpretation of what products might qualify for the tax credit could change.