It’s all over the news; with the passage of the federal stimulus bill there’s money available to help many Americans weatherize homes and make energy efficiency improvements. But how can Tennessee residents connect with the resources created by the American Recovery and Reinvestment Act of 2009 goes into effect.

Investing in a few basic measures to secure a home from outside elements could provide major benefits. The U.S. Department of Energy (DOE) says weatherization—the process of sealing air leaks and properly insulating a home—can reduce heating bills by up to 32 percent, resulting in an average energy savings of $358 per year.

As a result of the stimulus package, DOE’s Weatherization Assistance Program is expanding with a goal of weatherizing one million homes per year. In the past, only households that earned up to 150 percent of the national poverty level were eligible to participate. The stimulus bill extends eligibility to those with incomes below 200 percent of the national poverty level. For a family of four, that’s an income limit of $44,100

Program participants receive a professional energy consultation with an analysis of energy bills, a blower-door test to locate air leaks and advice on how to be more efficient. Workers then arrive to make energy upgrades like insulating walls and roofs, sealing air leaks, and installing more efficient heating and cooling systems. The process to weatherize a home through the program usually takes two days with an average cost of $2,500. Since some homes have different needs, the stimulus bill allows up to $6,500 to be spent on each home.

For members not eligible for federally funded programs, the stimulus plan provides a homeowner efficiency tax credit of up to $1,500, or 30 percent, of the cost for new energy upgrades, including weatherization activities as well as installation of efficient heating, ventilation, and air conditioning systems. Efficiency tax credits were already available for 2009, but carried a $500 limit (with additional caps for certain types of upgrades) and only covered up to 10 percent of a member’s investment.

Tax credits directly lower a member’s federal income taxes, and are generally more valuable than tax deductions because they reduce taxes owed dollar-for-dollar. In contrast, a tax deduction, like a home mortgage or charitable gift, lowers taxable income and may only offer small savings. For example, a $1,500 tax deduction for someone in the 25 percent tax bracket would lower taxes owed by $350; a $1,500 tax credit for energy efficiency efforts will lower taxes owed by $1,500!

Where to go to find more information?

Find agencies administering the Weatherization Assistance Program in your service area.

 If your income level is too high to qualify for the Weatherization Assistance Program, find out more about the available tax credits.