Can I get a tax credit for installing a new central air conditioner?
Maybe. Last year’s stimulus law expanded the tax credits for energy-efficient home improvements and extended the credit for 2009 and 2010. If you install an eligible central air-conditioning system in your principal residence before December 31, 2010, you could qualify for a tax credit worth 30% of the cost of the air-conditioning system and installation, up to a $1,500 maximum. Because it is a tax credit, it lowers your tax bill dollar for dollar.
Only certain central air-conditioning systems qualify for the credit, based on their energy efficiency. Many manufacturers provide a Manufacturer Certification Statement on their Web sites, certifying that the product qualifies for the tax credit. Your HVAC contractor may also be able to provide you with a copy. In some cases, you may need to replace both the heating and air-conditioning systems to get the credit. See the detailed explanation in the Federal Tax Credits for Consumer Energy Efficiency page at the government’s EnergyStar.gov Web site (the central air-conditioning requirements and FAQs are particularly helpful). Window-unit air conditioners are not eligible for the tax credit.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
To claim the credit, file Form 5695 with your 2010 tax return in the spring (the 2010 version of the form is not available yet, but here is a link to the 2009 form, as well as instructions and general information). You do not need to submit the Manufacturer Certification Statement of Eligibility with your tax return, but you should keep a copy with your records. The $1,500 maximum for the tax credit applies to 2009 and 2010 combined -- so if you took a credit for energy-efficient home improvements last year, you used up part of your allowance. A $1,000 credit claimed on your 2009 return, for example, means that your 2010 credit can’t exceed $500.
For more information about the tax breaks for energy-efficient home improvements, see Going Green Pays Off. For more information, see Energystar.gov.
-
The Stoic Retirement: Ancient Wisdom for Today's RealityA "Stoic retirement" doesn't mean depriving yourself. It's a character-based approach to life and aging that can bring calm and clarity.
-
My Teen Crashed His Car and Now Our Insurance Has Tripled. What Now?Dealing with the costly aftermath of a teen car accident is stressful. Here are your options for navigating it.
-
11 Outrageous Ways To Spend Money in RetirementWhether you have excess cash to spend or want to pretend, here’s a look at 11 ridiculous ways retirees can splurge.
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re BigGift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax DeductionTax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
-
Tax Refund Alert: House GOP Predicts 'Average' $1,000 Payouts in 2026Tax Refunds Here's how the IRS tax refund outlook for 2026 is changing and what steps you can take now to prepare.
-
New IRS Changes to FSA Contribution Limits for 2026: What to KnowHealth Care Flexible Spending Accounts have tax advantages worth looking into, especially in light of new IRS changes.
-
Is a New $25,000 Health Care Tax Deduction Coming in 2026?Tax Policy A proposal from GOP Sen. Josh Hawley adds to the chatter about health care affordability.
-
3 Ways High-Income Earners Can Maximize Their Charitable Donations in 2025Tax Deductions New charitable giving tax rules will soon lower your deduction for donations to charity — here’s what you should do now.
-
An HSA Sounds Great for Taxes: Here’s Why It Might Not Be Right for YouHealth Savings Even with the promise of ‘triple tax benefits,’ a health savings account might not be the best health plan option for everyone.
-
10 Retirement Tax Plan Moves to Make Before December 31Retirement Taxes Proactively reviewing your health coverage, RMDs and IRAs can lower retirement taxes in 2025 and 2026. Here’s how.
