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How to Cash In on the Replacement Window Tax Credit

If you are looking to save some money on a home improvement project this year, consider starting with those old windows. A new federal tax credit can put 30% of what you spend on new energy-efficient windows back into your pocket. And the savings won’t stop there: New windows will lower monthly bills, reduce condensation and protect your furniture and fabrics from sun damage. Keep reading to cash in on this opportunity.

Money Back: Understanding the Tax Credit


Energy-efficient vinyl-framed replacement windows from Simonton.
Energy-efficient vinyl-framed replacement windows from Simonton.

In a nutshell, if you buy energy efficient home improvement products that meet specific requirementsyou get up to 30% of your money back. And while windows aren’t the only credit-worthy products (doors, roofing, and insulation are some other items that can qualify for the kick-back), they are an easy place to start.

For a replacement window to qualify for the tax credit, it must have a U-factor rating of .30 or below and a Solar Heat Gain Coefficient (SHGC) rating of .30 or below. Both ratings can be found on the National Fenestration Rating Council (NFRC) label, which will be displayed on the product. “The lower the U-factor and SHGC ratings, the more energy efficient the window,” says Tom Herron, communications and marketing manager for NFRC. “We call it the ’30/30.'”

The “30/30” ratings for U-factor and SHGC required to qualify for the tax credit are measurements of the most important energy efficient qualities of a window. The U-factor is a measurement of the window’s effectiveness at preventing heat loss. Naturally, this measurement relates to heating costs in


The NFRC label indicates the "30/30" rating needed to qualify for the Federal Tax Credit for Energy Efficiency.
The NFRC label indicates the "30/30" rating needed to qualify for the Federal Tax Credit for Energy Efficiency.

the winter. The SHGC rating measures the window’s ability to block heat caused by sunlight. The SHGC value for a window indicates the fraction of transmitted and absorbed solar radiation admitted into the home. Remember: the lower the U-factor and SHGC, the better. “Although the tax credit can help you reduce the cost of the windows by 30 percent, the real savings are in the long term with reduced energy bills. You can’t recoup all of your money all of a sudden,” says Herron.

You might remember the previous Federal tax credit for “Energy Star” windows which awarded a $200 credit. The new system is more stringent, informs Kathy Ziprik, public relations representative for Simonton Windows, a window manufacturer. To make matters more complicated, the government imposed a “safe harbor” provision: up until June 1 of this year, the purchase of any Energy Star-labeled window would qualify for the new Federal Tax Credit for Energy Efficiency (30% of the cost up to $1500). Sorry, you don’t get the $200 AND the 30%. Then on June 1 the original “30/30” rating specifications were reinstated.

Tip: The tax credit on windows, doors, roofing and insulation applies to the cost of the product itself; it does not cover the installation cost. Any replacement window (or credit-worthy product) purchased must be “placed in service” between January 1, 2009 and December 31, 2010, and used in primary residences only.

Go to the next page to learn how to redeem your credit.

Collecting on the Credit

To claim the Federal Tax Credit for Energy Efficiency on a replacement window purchased and installed before December 31, 2010 a consumer must be sure to do three things:

  • Save the receipt for the replacement window(s)
  • Save a copy of the Manufacturer’s Certification Statement
  • File using IRS Tax Form 5695


You’ll send your window receipt and 5695 Tax Form when you file at the end of


Any Anderson window with the "EcoExcel" sticker is guaranteed to qualify for the Federal Tax Credit for Energy Efficiency.
Any Anderson window with the "EcoExcel" sticker is guaranteed to qualify for the Federal Tax Credit for Energy Efficiency.

the year. Then hold on to the Manufacturer’s Certification Statement—the signed document from the manufacturer, which verifies that the product qualifies for the tax credit. Some manufacturers are making it easy to get a hold of the Manufacturer’s Certification. “You can just go online, type in your window product number and print out the certification statement,” says Susan Roeder, corporate affairs and public relations representative for Andersen Corporation, a windows manufacturer based in Bayport, Minn.

Read more on rebates and tax credits for windows at Energy Star.
View a sample Manufacturer’s Certification Statement.

Keepin’ it Glassy

The high standards for tax credit qualification have some manufacturers scrambling to improve their products…and others patting themselves on the back. “When the lower thresholds for the tax credit were announced, most of our products already qualified,” says Roeder of Andersen Window products. So too with Pella: “Our entire Designer Series line of products already met the new requirements,” says Don Harms, brand manager for Pella. “Every one of our product lines has a product that meets it.” Pella’s product lines include wood, vinyl and fiberglass windows.

“There are really three levels of energy performance,” says Cordell Burton, an engineer for Pella, the Iowa-based window manufacturer. “The National Energy Code, Energy Star, and now the Tax Credit.” The “National Energy Code”—or International Energy Conservation Code (IECC)—imposes minimum standards on the energy efficiency of residential construction. Although states were required to comply with the minimum standards of the code, many imposed stricter codes of their own. “A solid aluminum, single-pane window that meets the National Energy Code standard isn’t even allowed in many states in the country,” says Burton. It certainly doesn’t qualify for the tax credit.

Manufacturers have a few tricks up their sleeves to get their products to meet the new standard. Since both the glass (glazing) and the frame affects performance testing results, using different frame materials, adding a third pane of glass and sealing gasses like argon between panes are all methods used to improve a window’s ratings.

Already shopping for new windows? Don’t forget to factor in these additional ratings:

  • Visible Transmittance: a lower number means less visible light passing through the glass—a common trade-off in an efficient window.
  • Air Leakage
  • Air Condensation

Go to the next page to learn how to install your new windows.

 Installation Tips

Installing a replacement window can be a DIY-friendly project with the proper know-how and safety precautions. Here are a few installation tips to consider:

  • Take proper measurements. Find the width of the window by measuring from the inside of one jamb horizontally across to the other. Measure this width at the top, middle and bottom of the window. Take the smallest measurement. Find the height by measuring from the top of the sill to the bottom of the head jamb. Find three measurements at the left, middle and right part of the window. Again, take the smallest measurement.
  • Investigate for existing issues. Are the walls around the window sound, or have they been compromised? Are there structural issues? Is the opening square? Installing a new window into an unsound existing window frame can undermine the energy efficiency of the new window. If there are existing problems to the frame that are beyond the homeowner’s abilities, consult with a professional.
  • Find a partner for an easier and safer install.


Tip:
For replacement window jobs that require extensive repair to the frame or surrounding structure, it’s a good idea to consider hiring a professional. Most professionals will charge by the opening. A good professional will take time to assess each existing window and determine what additional work will need to be done. Use the Renovate Your World’sFind a Contractor tool to receive estimates on your window replacement project.

The new Federal Tax Credit for Energy Efficiency is a great incentive for homeowners who are interested in increasing their home’s energy performance by replacing their windows. The combined credit, long-term energy savings and peace of mind that comes with green living may just tip the scales on those fence sitters.