The tax credits provided by the 2005 Energy Policy Act, enables the buyer of an energy-efficient product to save more on his purchase via tax credit. The tax credit would depend upon the SEER ratings. SEER stands for system’s seasonal energy efficiency ratio. The higher the ratio the higher will be the tax credit. The tax credit for Energy Star-labeled windows can be $200 and $250-$3,400 for a hybrid car, $150 for a furnace or boiler and $500 for insulation.



The tax credit is much better than a tax deduction as a tax credit reduces the tax payable, per dollar, but in tax deduction only the tax that is owed is removed. With tax credits I think the consumers will be comfortable buying energy efficient goods as they will lead to better savings.