You can get a credit on your Oregon income taxes for purchasing premium efficiency water heaters, solar water heaters, and drain-water heat recovery systems.
Eligible models are included on the Oregon Department of Energy list of qualifying systems. (See qualifying lists in right-hand column.) We update these lists as qualifying equipment comes on the market.
The tax credit is based on the amount of energy saved above standard models.
To qualify for a tax credit, you must have an Oregon income tax liability. If you do not have an Oregon income tax liability, you may choose to transfer your tax credit to an individual who does. This is done by checking the Pass-through Option section on the application form. More information is on the form.
The equipment must be located in an Oregon dwelling that is your primary or secondary residence to qualify for a tax credit.
Important: Applications for tax credits must be received by the Oregon Department of Energy no later than April 1 of the year following the purchase, even if the tax credit is carried forward.
Only premium efficiency water heaters are eligible for a tax credit. The premium efficiency water heaters are tankless gas water heaters (also called instantaneous, on-demand or point-of-use), heat pump water heaters and combination ("combo") space and water heating systems (see discussion below). Conventional tank-type water heaters are not efficient enough to qualify for a tax credit.
Qualifying tankless water heaters must have a minimum energy efficiency rating of 82 percent. In comparison, a tank gas water heater in the typical home is only 55 percent energy efficient. This means the average homeowner will save about 40 percent of their annual energy used for domestic hot water by installing a qualifying tankless gas water heater. Electric water heaters must have a COP of at least 100%.
Drain-water Heat Recovery
Drain-water heat recovery systems use the heat from shower water to cut energy use for water heating by 8 to 12 percent. Qualifying models are eligible for a tax credit or $80 to $120 depending on energy savings, not to exceed 25 percent of the cost. You need to have access to at least 5 feet of vertical drainpipe from the shower or on the main water drain. You can install the system yourself or hire a plumber. The cost of other installation components are also eligible.
"Combo" Space and Water Heating Systems
Premium efficiency combination ("combo") space and water heating systems consist of a qualifying water heater or boiler that serves both the domestic hot water needs and provides heat through a coil in an air handler, or directly through hydronic baseboard heaters or in-floor radiant heat. To qualify, the system must have a Combined Energy Factor (CEF) of at least 80%.
If a premium efficiency water heater is the source of heat, apply for the tax credit on the basis of the efficiency of the water heater.
At the present time, there is no tax credit for a passive water storage tank (sometimes called an indirect water heater) that might be installed in such a system.
If an air handler is installed to distribute the heat via forced air, as part of a “combo” system, a separate tax credit is possible for qualifying air handlers (see Furnaces and Air Handlers).
Solar Water Heating
You can get a tax credit of up to $1,500 for buying a solar water heating system for your home. Oregon´s certified solar contractors can pre-approve your tax credit. Be sure to get an OG300-certified system that meets the Oregon Solar Energy Industry Association tank standard.
Contact The Oregon Department of Energy
with any questions that aren´t answered in the forms linked to the right (503-378-4040 in Salem or 1-800-221-8035 toll-free in Oregon).