There are 3 types of water heaters covered by the tax credit:

1) Gas, Oil, and Propane Water Heaters with an Energy Factor of at least .82 – OR – a thermal efficiency of at least 90%. There are several types of gas, oil, and propane water heaters (storage tank, tankless, gas condensing), but only tankless can currently meet the criteria.  For a partial list of tankless water heaters that qualify for the tax credit go to the Air-Conditioning, Heating, Refrigeration Institute (AHRI).

 

 

  • Tax credit is 30% of the cost, up to $1,500, including installation.
  • All ENERGY STAR gas tankless water heaters qualify for the tax credit.
  • Gas condensing water heaters are not on the market yet.

2) Electric Heat Pump Water Heaters are covered if they have an Energy Factor of at least 2.0. This is a new technology and currently there is only one model that qualifies on the AHRI list. More heat pump water heaters are expected on the market by the end of 2009.

  • Tax credit is 30% of the cost, up to $1,500, including installation.
  • All ENERGY STAR qualified heat pump water heaters will qualify. (None exist today.)

3) Solar Water Heaters are covered if at least half of the energy generated comes from the sun and the system is certified by the Solar Rating and Certification Corporation (SRCC).

  • Tax credit is for 30% of the cost, including installation, with no upper limit.
  • All ENERGY STAR qualified solar water heaters qualify.

There is no tax credit for electric storage tank or electric tankless water heaters.