Home Energy Tax Credit & Xcel Energy Rebate

There is a 30% federal tax credit (up to $1,500 max) for installing efficient furnaces, A/C units, windows, heat pups, water heaters, etc. Congress expanded this credit for 2009 & 2010 to include doors, insulation materials, and certain roofs. There are no income limitations on these credits (at least as of right now). Note "efficient" has a technical definition so check the IRS' website to make sure what you are installing qualifies. Be sure to get a certificate from your installer for proof should you ever be audited by the IRS. See the IRS website for more information: http://www.irs.gov/formspubs/article/0,,id=207332,00.html

Another set of incentives you may not have known about are rebates offered by Xcel Energy. You can get up to $120 for a new furnace, up to $500 for a new A/C, up to $300 for insulation, up to $100 for water heaters, and more. Some of the rebates require you to use one of their certified installers and other rebates let you use whomever you wish for installation. Your installer needs to sign-off on these rebate forms and I have found that they will require you to hand-hold them a bit since these rebates are so new and they are not very familiar with them. Visit Xcel's website for more information: http://www.xcelenergy.com/Residential/Programs_Resources/HeatingandCoolingRebates/Pages/HeatingandCoolingRebates.aspx

These two things won't pay 100% of the cost for more efficient appliances, but can take a sizeable chunk out of the cost. For example a qualifying new furnace and A/C unit may cost around $6,500, but with the above incentives may only end up costing $4,380 ($6,500 - $1,500 tax credit - $120 Xcel furnace rebate - $500 Xcel A/C rebate).