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Oregon's Residential Energy Tax Credit Program

Introduction

A Residential Energy Tax Credit allows an Oregon resident to deduct the credit, dollar-for-dollar, against taxes owed on Oregon income tax filings. Any unused portion can be carried forward for up to five years. The tax credit is not a rebate and you will not receive cash back if your tax credit is more than your tax liability. See Transferring Your Tax Credit for more information.

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How do I apply for the tax credit?

Complete and sign the appropriate tax credit application for the system, equipment or service you buy.

Forms and instructions are available from your dealer, contractor or technician, or the Oregon Department of Energy. For heat pump or air conditioning systems, ducts, and solar systems, your technician provides the forms and can help you complete them.

Send the application to the Oregon Department of Energy with your receipt or other proof of payment. If your equipment meets the qualifications, you will receive a tax credit certificate in the mail. Tax season is very busy, so please send in your application as soon as you can; requests are processed in the order they are received.

Claim the tax credit when you file your Oregon income tax return. Keep your certificate, a copy of your application, proof of payment and any other supporting documentation.

If your tax return is audited, the Oregon Department of Revenue will request copies of the information. If you have questions concerning claiming the credit on your Oregon tax return, contact the Oregon Department of Revenue at 1-800-356-4222 or 503-378-4988.

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Transferring your tax credit

The pass-through option will allow a person who buys qualifying equipment, systems or services to transfer an energy tax credit to an individual or business with Oregon tax liability. The tax credit is exchanged for a lump-sum payment based on a percentage of the certified tax credit amount. The equipment owner is responsible for finding a pass-through partner, who must have an Oregon tax liability.

To use this option, the equipment owner first completes the regular tax credit application form for the equipment purchased so the application can be reviewed for eligibility. Once approved, the Oregon Department of Energy will send a pass-through option application to the equipment owner. The owner and the pass-through partner (the tax credit recipient) will complete and sign the pass-through option application and mail it to the Oregon Department of Energy.

The Oregon Department of Energy will then issue the tax credit certificate to the pass-through partner and the partner will pay the owner the amount specified. There may be tax implications for this transfer. Equipment owners and pass-through partners should consult with their tax preparers.
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Who can get the tax credit?

You may be eligible if the qualifying equipment is used in your primary residence or in your secondary (vacation) home or rental home. The home needs to be located in Oregon.

Please go to the Oregon Department of Energy’s website for a list of qualifying equipment, systems, and services. Only items eligible at the time of purchase qualify. You must be the owner of the eligible new equipment (meaning the original use begins with you). The list of qualifying equipment is online at http://tinyurl.com/energy-retc. Tax credit technicians required for some installations can be found on our website.
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How much is the tax credit?

The cost of the improvements and energy saved is the basis for figuring the amount of the tax credit. The maximum tax credit for each item changes from time to time, as does the list of qualifying equipment and installers, so please check the website before making a purchase.
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What qualifies for a tax credit?

The following items currently qualify for Oregon’s Residential Energy Tax Credit.
 
HEATING AND COOLING SYSTEMS
 
Heat Pumps and Air Conditioning Systems
Use an Oregon Department of Energy tax credit technician to install and performance test a qualifying premium efficiency heat pump or central air conditioning system. The amount of the tax credit depends upon the efficiency of the system you install.
 
Condensing Furnaces and Air Handlers
Purchasing a premium efficiency furnace or air handler can qualify for a tax credit. You do not need to use a technician approved by the Oregon Department of Energy to qualify for the tax credit.
 
Premium Efficiency Duct Systems
Gaps, leaks and holes in heating and cooling ductwork can account for up to 30 percent of home heating (or cooling) loss. You can get a tax credit for sealing ductwork in your existing home or installing a well-designed and sealed duct system in your new home. The technician performing the work must be approved by the Oregon Department of Energy, so please check our website for the list in your area.
 
Ductless, Mini-split Heat Pumps
Ductless, mini-split heat pumps are a relatively new type of air-source heat pump where the warm or cool air is delivered directly to the room of a home rather than through a central air handler and ductwork. Ductless heat pumps operate on the same principle as traditional heat pumps — using electricity to move heat between outdoor and indoor air by compressing and expanding a refrigerant. Qualifying models operate efficiently at outside temperatures down to at least 17°F. For a homeowner to receive a tax credit, system installation needs to be done by a technician trained by the equipment manufacturer within the past five years.
 
Ground-Source Heat Pumps
Closed-loop ground-source heat pumps for space heating are eligible for a tax credit. Also qualifying are earth-coupled heat pumps and systems that use a secondary heat exchanger submerged in a well, lake, pond or stream. (Systems that pump water directly out of a well, lake, pond or stream are not eligible.) A tax credit geothermal technician must install these systems.
 
Wood and Pellet Stoves
New premium efficiency wood and pellet stoves are eligible for a tax credit, but only if they are on the Oregon Department of Energy’s qualifying list and meet stated emission standards. Installation of a dedicated outside combustion air intake is also required. For a list of qualifying stoves, please see the Oregon Department of Energy website.
 
SOLAR AND WIND SYSTEMS
 
Solar Water Heating
Solar water heating systems with OG-300 certification are eligible for a tax credit, depending on efficiency and solar access. A tax credit solar thermal technician must verify these systems. Pools and spa systems do not require verification of a tax credit technician.
 
Solar Space Heating
Homes designed to heat with sun from south-facing windows or solar collectors used for space heating are eligible for a tax credit. Estimated system savings determine the amount of the credit. Contact the Oregon Department of Energy for minimum design standards.
 
Solar Electric (Photovoltaic) Systems
Photovoltaic (PV) systems make electricity from the sun and are eligible for a tax credit. To receive the incentive, you need to use a solar PV technician approved by the Oregon Department of Energy.

Wind Electric Systems
Wind electric systems are eligible for a tax credit. Qualifying costs include wind-measuring equipment, turbines, towers, associated components, engineering costs, utility interconnection equipment and installation.
 
ALTERNATIVE FUEL INFRASTRUCTURE
 
Alternative fuel infrastructure projects can qualify for tax credits, including electric vehicle charging stations and compressed natural gas fueling stations. Please visit the Oregon Department of Energy’s website for more specific information on these systems.
 
FUEL CELLS
 
Fuel cells take hydrogen from a fuel and combine it with oxygen, producing electricity, space heat and hot water.
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