New tax bill includes energy tax credits

First they were in, then they were out. But it looks like energy-efficiency incentives for consumers will survive the final version of the the tax bill that President Obama is expected to sign into law later today. The incentives will be a return to the pre-stimulus credits that were expanded under the American Recovery and Reinvestment Act of 2009.

Under the new bill, homeowners who complete certain energy-efficiency home improvements in 2011 will earn a credit covering 10 percent of the cost, up to $500. That's down from the 30-percent-up-to-$1500 cap on the existing credit. Qualifying projects include the installation of insulation, sealing products, windows, furnaces, air-conditioners, heat pumps, water heaters, and wood stoves. Note that you might be able to complete simpler retrofits, for example insulating the attic, before the higher credits expire on December 31, 2010. Read "Take advantage of tax credits and rebates" for details. 

Energy-efficiency advocates are of two minds on the provision. "The tax incentives adopted today are a welcome signal to U.S. consumers, who currently face rising energy costs in a still-uncertain economy, that Uncle Sam will help them pay for energy efficiency improvements to make their homes more comfortable and their energy bills more affordable for years to come," said Kateri Callahan, president of the Alliance to Save Energy, in a statement. "But we're sorely disappointed that Congress did not see fit to make the incentives more generous. That would have increased their use by consumers, to the benefit of our economy, energy security and environment."

As you're likely to hear often today, this is what compromise looks like.

—Daniel DiClerico