We have been getting a lot of questions about the 2006 Federal Tax Credits so here is some overview information:
You can get a one-time tax credit for a total of $500 for installing efficient new windows, insulation, roofs, tankless heaters and high efficiency boilers in your home.
Who gets it?
Individuals who install specific energy-efficient home improvements.
What products are eligible?
Exterior windows 10 percent of the total cost, up to $200.
Insulation, exterior doors, or pigmented metal roofs: 10 percent of the total cost, up to $500. Duct sealing and weather stripping like Low-E insulation.
Central air conditioner, heat pump, or tankless water heater: up to $300 towards the full purchase price.
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More Tankless Info here:
What is a tax credit? You don't receive an income tax credit when you buy the product, like an instant rebate. You claim the credit on your federal income tax form at the end of the year. The credit then increases the tax refund you receive or decreases the amount you have to pay.
Tax credits vs. tax deductions. In general a tax credit is more valuable than a similar tax deduction. A tax credit reduces the tax you pay, dollar-for-dollar. Tax deductions - such as those for home mortgages and charitable giving, for example - lower your taxable income. If you are in the 30 percent tax bracket, your income tax is reduced by
30 percent of the value of a tax deduction. But a tax credit reduces your federal income tax by 100 percent of the amount of the credit.More Info: