During the last month of 2010, President Obama singed into law a bill which would allow unemployment benefits and the Bush era tax breaks to continue.
What wasn’t publicly promoted was that the law:
· Slashed the popular tax credits for energy-efficient remodeling from the current 30 percent of an improvement's cost ($1,500 maximum per taxpayer) to a 10 percent credit, with a $500 maximum for expenditures on insulation materials, exterior windows and storm doors, skylights and metal and asphalt roofs that resist heat gain.
· New dollar-specific limits on key improvements that had been eligible for 30 percent credits. These include a $150 tax credit limit on the costs of energy-efficient natural gas, propane and oil furnaces, and hot water boilers, plus a $300 credit limit on the costs of central air-conditioning systems, electric heat pump water heaters, biomass stoves for heating or water heating, electric heat pumps, and natural gas and propane water heaters.
· Limits allowable tax credits available for energy-efficient windows installed during 2011 to a total of $200, compared with the previous $1,500. On top of that, it prohibits taxpayers who have taken total tax credits in past years exceeding $500 from claiming any additional credits on energy-conservation projects they undertake in the coming year.
It is likely this new law will move people away from doing energy efficient improvements to their homes and more kitchen and bathroom remodeling projects like before. However, as energy prices continue to increase, taking on these types of projects may be enough of a reward if it means people can save on their energy bills.