tax formsThe federal tax credits available for energy efficiency upgrades including insulation, air sealing products, energy efficient appliances, windows and more is set to expire on December 31, 2011. If you’d like to take advantage of the tax credit, any products need to be purchased and installed by then.

The federal tax credit for energy efficiency was put into place to help allay the extra cost that typically accompanies products with above-average energy efficiency. Although energy efficient appliances -- as well as other energy efficiency products like insulation and high efficiency mechanical equipment -- typically pay for themselves in energy savings over the long term, the upfront cost is often enough to dissuade people from purchasing them (particularly in a tough economy). The tax credit aims to make up the difference. Although it's less this year than it was last year (credits for an insulation upgrade dropped from 30% to 10% of total cost this year), it's still a deal.

So how do you take advantage of the energy efficiency tax credit before it’s too late?

  • Go energy efficient. If you're buying any new appliances or mechanical equipment, make sure you pick up the most energy efficient mode. It will pay off in the long run.
  • Save your receipts. Also be sure to see if the manufactuer provides any information about whether their product is eligible. 
  • Download the IRS form 5695 as soon as it becomes available on the IRS website. (The 2011 version isn't there yet, but you can get an idea of what it will look like by checking out the 2010 form here (PDF).)
  • Tell your friends. A recent survey found that 61% of consumers did not even know that tax credits were available for energy efficiency upgrades. Well, they are available now, but they won't be for long. If you have friends or family that you think might be interested, let them know before the holiday season rolls around.

Moving forward, we can only hope that the federal tax credit for energy efficiency gets renewed, as energy efficiency is the most cost-effective way to reduce fossil fuel consumption and fight climate change, while helping homeowners save money and helping the economy to boot.

And, if you miss the deadline for the tax credit, don’t fret: there are a number of state, local and utility incentives available to help homeowners make energy efficiency upgrades that are still available. Check out our article on the best resources for energy efficiency tax credit and incentive information for more info.

Here's a table of the tax credits that are available for energy efficiency upgrades right now:

energy efficiency tax credits 2011

Image source: Sierra Club