How the original tax credit and the new credit relate has caused a lot of confusion with homeowners—and even industry professionals. And since confusion leads to delays and frustration when homeowners are trying to make a decision on their home improvements, I decided to write this post to help answer a couple of your questions.

The original energy tax credit offered in 2006-2007 was worth 10% of the cost for replacement windows, up to $200. If you replaced both windows and doors, you could claim up to a one-time maximum credit of $500 for all products.

That tax credit expired on December 31, 2007. Although Congress and President Bush restored it for 2009, they didn’t go back and help out all the homeowners who made the smart decision to replace their windows in 2008. Bottom line: If you installed windows in 2008, you aren’t eligible for a tax credit.

Then, this February, President Obama and the new Congress passed a new energy tax credit as part of the Stimulus Plan. This credit is worth 30% of the cost of the product, up to $1,500. If you got the credit for replacement windows or doors in 2006-07, you’re still eligible for the entire $1,500.

I hope that clears up some confusion. Let me know what you think about the new energy efficiency tax credit for home improvements. Post your comment, and I’ll get back to you.

Back when the credit was first offered in 2006 and 2007, Energy Star certification was the only requirement. But window technology has improved in the few years Energy Star set their standards. The new tax credit raises the standards a full 25% above Energy Star. That means you can’t trust the Energy Star label on your window to get your $1,500.

By raising the standards, Congress and President Obama have actually done something smart. You’ve got a great incentive to replace your windows with new, energy-efficient ones that will start saving you money on energy bills. Plus, we can finally start reducing our energy consumption and become energy independent.

NFRC: The New Benchmark For Window Ratings

Energy Star plans to raise their requirements in 2010. For now, you can trust the National Fenestration Ratings Council (NFRC) to tell you which windows qualify. The NFRC is non-profit organization that scientifically tests each and every replacement window for energy performance.

If you’ve ever bought a window, you should have seen an NFRC label. That sticker tells you some very important information, including the U-Factor and the Solar Heat Gain Coefficient (SHGC) of the windows. The standards for the tax credit are based on those two ratings.

Just find the NFRC sticker on any replacement window to check the U-Factor and SHGC for yourself.

A low U-Factor will stop heat loss, which keeps your home warm and cozy, and your energy bills low, in the winter. A low SHGC helps block the sun’s heat from your home so you can use your AC more efficiently and stay cooler for less money. For both U-Factor and SHGC, low values are better. You want a number closer to 0.

To qualify for the energy tax credit, your new windows must have a U-Factor and a SHGC of .30 or less. .31 on one and .29 on the other won’t cut it. Both have to meet the standards. Examine that NFRC sticker carefully, or verify the ratings yourself over at http://www.nfrc.org.

Let’s Start Saving Energy Now…Before It’s Too Late

The price of energy is only going up, and replacement windows aren’t getting any cheaper. The government is only offering this credit for two years. They want you to start saving energy NOW. The Department of Energy says that if every American home upgraded to the new standards, we would save the energy equivalent to what five coal power plants produce. That’s each year.

So let’s help out our country. You’ll also help yourself because you’ll stay more comfortable all year round and save money on your energy bills.

You can make the entire process easy by choosing Mr. Rogers Windows. You’ll find windows that qualify you for the tax credit in all your favorite styles.

Check back in a day or two. I’ll have some more information about the tax credit.